Aymond Electronics Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company had budgeted its fixed manufacturing overhead cost at $42,700 for the month and its level of activity at 2,000 MHs. The actual total fixed manufacturing overhead was $44,100 for the month and the actual level of activity was 1,800 MHs. What was the fixed manufacturing overhead budget variance for the month to the nearest dollar?
A) $5,670 favorable
B) $1,400 favorable
C) $5,670 unfavorable
D) $1,400 unfavorable

Question

Quizplus · Accepted Answer

The fixed manufacturing overhead budget variance is calculated as the difference between the actual fixed overhead and the budgeted fixed overhead. The actual fixed overhead was $44,100, and the budgeted fixed overhead was $42,700. The variance is $44,100 - $42,700 = $1,400 unfavorable.

Aymond Electronics Corporation Has a Standard Cost System in Which