Question 14. A manufacturer of playground equipment has a standard costing system based on machine hours (MHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below: Denominator Level of Activity 3,100 MHs Fixed Overhead Cost $42,200 The following data pertain to operations for the most recent period: Actual Hours 3,600 MHs Standard Hours Allowed for the Actual Output 3,700 MHs Actual Total Fixed Overhead Cost $41,000 What was the fixed overhead budget variance for the period, rounded to the nearest dollar? Question 14 options: $950 unfavourable. $1,200 favourable. $2,790 favourable. $4,470 unfavourable.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Question 14.
A manufacturer of playground equipment has a
| Denominator Level of Activity | 3,100 MHs |
| Fixed Overhead Cost | $42,200 |
The following data pertain to operations for the most recent period:
| Actual Hours | 3,600 MHs |
| Standard Hours Allowed for the Actual Output | 3,700 MHs |
| Actual Total Fixed Overhead Cost | $41,000 |
What was the fixed overhead
Question 14 options:
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$950 unfavourable.
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$1,200 favourable.
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$2,790 favourable.
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$4,470 unfavourable.
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