Xero Company's standard factory overhead rate is $3.75 per direct labor hour (DLH),calculated at 90% capacity = 900 standard DLHs.In December,the company operated at 80% of capacity,or 800 standard DLHs.Budgeted factory overhead at 80% of capacity is $3,150,of which $1,350 is fixed overhead.For December,the actual factory overhead cost was $3,800 for 840 actual DLHs,of which $1,300 was for fixed factory overhead.What was the fixed factory overhead spending variance for December?
A)$50 favorable.
B)$225 favorable.
C)$425 unfavorable.
D)$560 unfavorable.
E)$610 unfavorable.

Question

Quizplus · Accepted Answer

The fixed factory overhead spending variance is calculated as the difference between the actual fixed overhead and the budgeted fixed overhead. The actual fixed overhead was $1,300, and the budgeted fixed overhead at 80% capacity was $1,350. Therefore, the variance is $1,350 - $1,300 = $50 favorable.

Xero Company's Standard Factory Overhead Rate Is $3