Answer the following question(s)using the information below.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:

-What is the fixed overhead rate variance?
A)$1,000 unfavourable
B)$2,000 favourable
C)$3,000 unfavourable
D)$5,000 favourable
E)$983 unfavourable

Question

Answer the following question(s)using the information below.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:
 
-What is the fixed overhead rate variance?
A)$1,000 unfavourable 
B)$2,000 favourable 
C)$3,000 unfavourable 
D)$5,000 favourable 
E)$983 unfavourable

Quizplus · Accepted Answer

Fixed overhead rate variance = (Actual fixed overhead rate - Budgeted fixed overhead rate) x Actual machine hours
Actual machine hours = 3,150
Budgeted fixed overhead rate = 25,000 units x 0.4 machine hours per unit x $20.00 per machine hour = $200,000
Actual fixed overhead rate = $60,000 ÷ 3,150 machine hours = $19.05 per machine hour
Fixed overhead rate variance = ($19.05 - $20.00) x 3,150 = $2,997 unfavourable, or approximately $3,000 unfavourable. Therefore, the answer is C.

Answer the Following Question(s)using the Information Below