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Fixed Overhead Spending Variance and Fixed Over Applied

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Slaton Company manufactured 10,000 golf bags during March. The standard fixed overhead rate is $20.00 per labor-hour, based on a denominator level of 6,000 labor hours and budgeted fixed overhead of $120,000. Actual fixed overhead totaled $122,000, and the actual labor hours worked totaled 5,100 hours. The standard hours allowed for the 10,000 golf bags produced during the period was 5,000.

1. The fixed overhead spending variance for March is closest to:
A. $22,000 unfavorable.
B. $20,000 unfavorable.
C. $ 2,000 unfavorable.
D. $18,000 favorable.

2. For March, fixed overhead is

A. overapplied by $2,000.
B. underapplied by $2,000.
C. overapplied by $22,000.
D. underapplied by $22,000.

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Solution Summary

This solution illustrates how to compute the fixed overhead spending variance, how to compute how much fixed over is applied, and how to compute whether it is overapplied or underapplied and by how much.

Solution Preview

1.
Fixed overhead spending variance = Actual results - Planning budget
Fixed overhead spending variance = $122,000.00 - ...

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