The Dodge Company makes and sells a single product and uses a standard cost system in which manufacturing overhead costs are applied to units of product on the basis of standard direct labor-hours. The standard cost card shows that 5 direct labor-hours are required per unit of product. The Dodge Company had the following budgeted and actual data for the year:

The budgeted direct labor-hours is used as the denominator activity for the month.
-The fixed manufacturing overhead budget variance was:
A)$750 F
B)$3,750 F
C)$7,500 F
D)$3,000 U

Question

The Dodge Company makes and sells a single product and uses a standard cost system in which manufacturing overhead costs are applied to units of product on the basis of standard direct labor-hours. The standard cost card shows that 5 direct labor-hours are required per unit of product. The Dodge Company had the following budgeted and actual data for the year:

The budgeted direct labor-hours is used as the denominator activity for the month.
-The fixed manufacturing overhead budget variance was:

The budgeted direct labor-hours is used as the denominator activity for the month.
-The fixed manufacturing overhead budget variance was:
A)$750 F 
B)$3,750 F 
C)$7,500 F 
D)$3,000 U

Quizplus · Accepted Answer

Budget variance = Actual fixed overhead - Budgeted fixed overhead cost
= $78,000 - $75,000 = $3,000 U

The Dodge Company Makes and Sells a Single Product and Uses