Able Control Company, which manufactures electrical switches, uses a standard cost system in which manufacturing overhead costs are applied to units of product on the basis of standard direct labor-hours (DLHs). The standard overhead costs are shown below: *Based on 300,000 DLHs per month.

The following information is available for the month of October:

• Plans called for the production of 60,000 switches.
• 56,000 switches were actually produced.
• 275,000 direct labor-hours were worked at a total cost of $2,550,000.
• Actual variable manufacturing overhead costs were $2,340,000.
• Actual fixed manufacturing overhead costs were $3,750,000.
-The fixed manufacturing overhead budget variance for October was:
A)$48,000 Unfavorable
B)$150,000 Unfavorable
C)$300,000 Favorable
D)$390,000 Unfavorable

Question

Able Control Company, which manufactures electrical switches, uses a standard cost system in which manufacturing overhead costs are applied to units of product on the basis of standard direct labor-hours (DLHs). The standard overhead costs are shown below:  *Based on 300,000 DLHs per month.

The following information is available for the month of October:

• Plans called for the production of 60,000 switches.
• 56,000 switches were actually produced.
• 275,000 direct labor-hours were worked at a total cost of $2,550,000.
• Actual variable manufacturing overhead costs were $2,340,000.
• Actual fixed manufacturing overhead costs were $3,750,000. 
-The fixed manufacturing overhead budget variance for October was:
A)$48,000 Unfavorable 
B)$150,000 Unfavorable 
C)$300,000 Favorable 
D)$390,000 Unfavorable

Quizplus · Accepted Answer

Budget variance = Actual fixed overhead - Budgeted fixed overhead cost
= $3,750,000 - (60,000 units F1F1F1S1F1F1F10 5 hours per unit F1F1F1S1F1F1F10 $12.00 per hour)
= $3,750,000 - $3,600,000 = $150,000 U

Able Control Company, Which Manufactures Electrical Switches, Uses a Standard