Sloth Company reports the following information for the last year of operations:
$\begin{array} { l }
\text {Actual fixed overhead $ \operatorname{costs}(7,000 $ units) }&\$77,000 \
\text {Budgeted fixed overhead costs(10,000 units) }&80,000 \
\text { Planued level of operations(in units)}&10,000 \
\text {Actual level of operations(in units) }&7,000 \
\end{array}$

What is the fixed overhead spending variance?
A) $3,000 Favorable
B) $21,000 Unfavorable
C) $24,000 Unfavorable
D) $30,000 Favorable

Question

Sloth Company reports the following information for the last year of operations:
$\begin{array} { l  }
 \text {Actual fixed overhead $ \operatorname{costs}(7,000 $ units) }&\$77,000 \
 \text {Budgeted fixed overhead costs(10,000 units) }&80,000 \
 \text { Planued level of operations(in units)}&10,000 \
 \text {Actual level of operations(in units) }&7,000 \
\end{array}$

What is the fixed overhead spending variance?
A) $3,000 Favorable
B) $21,000 Unfavorable
C) $24,000 Unfavorable
D) $30,000 Favorable

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. In this case, the actual fixed overhead costs are $77,000, and the budgeted fixed overhead costs are $80,000. Therefore, the fixed overhead spending variance is $80,000 - $77,000 = $3,000 Favorable.

Sloth Company Reports the Following Information for the Last Year