At 60,000 machine hours,Clark Company's static budget for variable overhead costs is $180,000.At 60,000 machine hours,the company's static budget for fixed overhead costs is $300,000.Machine hours are the cost driver of all overhead costs.The static budget is based on 60,000 machine hours.At 60,000 machine hours,the company produces 40,000 units.The following data is available:
$\begin{array} { l }
\text {Actual units produced and sold }&42,000 \
\text {Actual machine hours }&64,000 \
\text {Actual variable overhead costs }& \$185,600\
\text {Actual fixed overhead costs }&\$302,400 \
\end{array}$

What is the fixed overhead spending variance?
A) $2,400 Unfavorable
B) $2,400 Favorable
C) $1,000 Favorable
D) $1,000 Unfavorable

Question

At 60,000 machine hours,Clark Company's static budget for variable overhead costs is $180,000.At 60,000 machine hours,the company's static budget for fixed overhead costs is $300,000.Machine hours are the cost driver of all overhead costs.The static budget is based on 60,000 machine hours.At 60,000 machine hours,the company produces 40,000 units.The following data is available:
$\begin{array} { l  }
 \text {Actual units produced and sold }&42,000 \
 \text {Actual machine hours }&64,000 \
 \text {Actual variable overhead costs }& \$185,600\
 \text {Actual fixed overhead costs }&\$302,400 \
\end{array}$

What is the fixed overhead spending variance?
A) $2,400 Unfavorable
B) $2,400 Favorable
C) $1,000 Favorable
D) $1,000 Unfavorable

Quizplus · Accepted Answer

The fixed overhead spending variance is calculated as the difference between the actual fixed overhead costs and the budgeted fixed overhead costs. The budgeted fixed overhead costs are $300,000, and the actual fixed overhead costs are $302,400. Therefore, the variance is $302,400 - $300,000 = $2,400 Unfavorable, indicating that the actual costs were higher than the budgeted costs.

At 60,000 Machine Hours,Clark Company's Static Budget for Variable Overhead