The management of Brown & Company is analyzing fixed manufacturing overhead variances for the fiscal period just ended. For the period, Brown & Company had budgeted $800,000 in fixed manufacturing overhead but had actually incurred $580,000. Also, the standard fixed overhead rate was $20 per machine hour and Brown & Company had allowed for 50,000 machine hours.
What is Brown & Company's fixed overhead budget variance?
A) $ 220,000 (F)
B) $ 220,000 (U)
C) $ 600,000 (F)
D) $ 440,000 (F)

Question

Quizplus · Accepted Answer

The fixed overhead budget variance is the difference between the actual amount incurred and the lump sum amount budgeted for the period. $580,000 minus $800,000 equals $220,000 F.

The Management of Brown & Company Is Analyzing Fixed Manufacturing