THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 6 THROUGH 8.
Jenny’s Corporation manufactured 25,000 grooming kits for horses during March. The fixed-overhead cost-allocation rate is $20.00 per machine-hour. The following fixed overhead data pertain to March.
Actual Static Budget
Production 25,000 units 24,000 units
Machine-hours 6,100 hours 6,000 hours
Fixed overhead costs for March $123,000 $120,000
- What is the amount of fixed overhead allocated to production?
- What is the fixed overhead spending variance?
- What is the fixed overhead production-volume variance?
- What is the amount of fixed overhead allocated to production?
[25,000 x (6,000/24,000)] x $20.00 = $125,000
- What is the fixed overhead spending variance?
$123,000 actual costs – $120,000 budgeted cost = $3,000 U
- What is the fixed overhead production-volume variance?
$120,000 – [25,000 x (6,000/24,000) x $20.00] = $5,000 F
