Bentz Fashions uses standard costs for its manufacturing division

Question

From the following data, calculate the total fixed overhead variance.

Actual fixed overhead $40,000
Budgeted fixed overhead $27,000
Allocated fixed overhead $27,000
Standard overhead allocation rate $6.75
Standard direct labor hours per unit 2.00 DLHr
Actual output 2,000 units

A) $13,000 U
B) $13,000 F
C) $13,500 U
D) $13,500 F

Answer 1

A .A) Total fixed overhead variance = Fixed overhead cost variance + Fixed overhead volume variance

Note:
Fixed overhead cost variance = Actual fixed overhead - Budgeted fixed overhead

Overhead allocated to production = Standard overhead allocation rate x Standard quantity of the allocation base allowed for actual output

Fixed overhead volume variance = Budgeted fixed overhead - Allocated fixed overhead