Desormeaux Corporation applies manufacturing overhead to products on the basis of standard machine-hours. The budgeted fixed manufacturing overhead cost for the most recent month was $21,600 and the actual fixed manufacturing overhead cost for the month was $21,120. The company based its original budget on 5,400 machine-hours. The standard hours allowed for the actual output of the month totaled 5,850 machine-hours. What was the overall fixed manufacturing overhead budget variance for the month?
A) $1,800 favorable
B) $1,800 unfavorable
C) $480 favorable
D) $480 unfavorable

Question

Quizplus · Accepted Answer

Fixed manufacturing overhead budget variance = Actual fixed overhead cost - Budgeted fixed overhead cost 
= $21,120 - $21,600 
= $480 unfavorable.

Note that the variance is unfavorable because actual fixed overhead costs were less than the budgeted fixed overhead costs.

Desormeaux Corporation Applies Manufacturing Overhead to Products on the Basis