The Murray Corporation makes and sells a single product. The company recorded the following activity and cost data for May:

The fixed component of the predetermined overhead rate is $0.95 per direct labor-hour.
-The fixed manufacturing overhead budget variance for May was:
A)$2,400 U
B)$2,400 F
C)$6,000 U
D)$6,000 F

Question

The Murray Corporation makes and sells a single product. The company recorded the following activity and cost data for May:

The fixed component of the predetermined overhead rate is $0.95 per direct labor-hour.
-The fixed manufacturing overhead budget variance for May was:
A)$2,400 U 
B)$2,400 F 
C)$6,000 U 
D)$6,000 F

Quizplus · Accepted Answer

The fixed manufacturing overhead budget variance is calculated as the difference between the actual fixed manufacturing overhead costs and the budgeted fixed manufacturing overhead costs. In this case, the actual fixed manufacturing overhead costs were $10,000 and the budgeted fixed manufacturing overhead costs were $7,600. Therefore, the fixed manufacturing overhead budget variance is $10,000 - $7,600 = $2,400 F.

The Murray Corporation Makes and Sells a Single Product