The Dillon Corporation makes and sells a single product. Overhead costs are applied on the basis of standard direct labor-hours. The standard cost card shows that 5 direct labor-hours are required per unit. The Dillon Corporation had the following budgeted and actual data for March:

-The fixed manufacturing overhead budget variance for March is:
A)$900 F
B)$3,900 F
C)$3,000 U
D)$7,750 F

Question

The Dillon Corporation makes and sells a single product. Overhead costs are applied on the basis of standard direct labor-hours. The standard cost card shows that 5 direct labor-hours are required per unit. The Dillon Corporation had the following budgeted and actual data for March:

-The fixed manufacturing overhead budget variance for March is:

-The fixed manufacturing overhead budget variance for March is:
A)$900 F 
B)$3,900 F 
C)$3,000 U 
D)$7,750 F

Quizplus · Accepted Answer

The fixed manufacturing overhead budget variance can be calculated as the difference between the budgeted fixed overhead and the actual fixed overhead incurred. In this case, the budgeted fixed overhead is $60,000 (500 units x $120 per unit), and the actual fixed overhead incurred is $63,000.

Fixed manufacturing overhead budget variance = Budgeted fixed overhead - Actual fixed overhead incurred 
= $60,000 - $63,000 
= $3,000 unfavorable (U)

Therefore, the correct answer is C, $3,000 U. The other answer choices are not correct based on the information given.

The Dillon Corporation Makes and Sells a Single Product