Medina Sports manufactures snowboards. Medina had budgeted 25 direct labor hours per unit and projected that 2,120 units would be produced. The budgeted fixed manufacturing overhead costs were $530,000. The actual overhead costs for the year were $544,000 and 2,150 units were produced. What is the fixed overhead budget variance?

Question

Quizplus · Accepted Answer

The fixed overhead budget variance formula is:
Fixed overhead budget variance = Budgeted fixed overhead costs - Actual fixed overhead costs

Plugging in the numbers from the problem, we get:

Fixed overhead budget variance = $530,000 - $544,000
Fixed overhead budget variance = -$14,000

Since the actual overhead costs were greater than the budgeted costs, the result is unfavorable. Therefore, the correct answer is B, $14,000 unfavorable.

Medina Sports Manufactures Snowboards