Forward Venture Company, which uses a standard cost system, budgeted $600,000 of ﬁxed overhead when 40,000 machine hours were anticipated.Other data for the period were: Actual units produced: 10,000 Standard production time per unit: 3.9 machine hours Fixed overhead incurred: $620,000 Actual machine hours worked: 42,000 Forward Venture Company's ﬁxed-overhead budget variance is:
A)$10,000 favorable.
B)$15,000 favorable.
C)$15,000 unfavorable.
D)$20,000 favorable.
E)$20,000 unfavorable.

Question

Quizplus · Accepted Answer

The fixed overhead budget variance is the difference between the actual fixed overhead incurred and the budgeted fixed overhead. The budgeted fixed overhead was $600,000, and the actual fixed overhead incurred was $620,000. Therefore, the variance is $620,000 - $600,000 = $20,000 unfavorable.

Forward Venture Company, Which Uses a Standard Cost System, Budgeted