Fixed manufacturing overhead was budgeted at $200,000, and 25,000 direct labor hours were budgeted. If the fixed overhead volume variance was $8,000 favorable and the fixed overhead spending variance was $6,000 unfavorable, fixed manufacturing overhead applied must be
A)$208,000.
B)$206,000.
C)$202,000.
D)$194,000.

Question

Quizplus · Accepted Answer

The fixed overhead volume variance is favorable, meaning more overhead was applied than budgeted. The spending variance is unfavorable, meaning actual overhead was more than budgeted. Therefore, the applied overhead is $200,000 (budgeted) + $8,000 (favorable volume variance) = $208,000.

Fixed Manufacturing Overhead Was Budgeted at $200,000, and 25,000 Direct