Texas Metal Company
Texas Metal Company has developed standard overhead costs based on a monthly capacity of 180,000 machine hours as follows:
$$\begin{array}{l}
\text { Standard cost par unit: }\
\begin{array} { l l l }
\text { Variable partion } & 2 \text { hours @ } \$ 3 = & \$ 6 \
\text { Fixed portion } & 2 \text { hours@ } \$ 5 = &\underline{ \$ 0}
\end{array}
\end{array}$$
$\underline{\$ 16}$

During November,90,000 units were scheduled for production,but only 80,000 units were actually produced.The following data relate to November:
Actual machine hours used were 165,000.
Actual overhead incurred totaled $1,378,000 ($518,000 variable plus $860,000 fixed).
All inventories are carried at standard cost.
Refer to Texas Metal Company.The fixed overhead spending variance for November was

Question

Texas Metal Company
Texas Metal Company has developed standard overhead costs based on a monthly capacity of 180,000 machine hours as follows:
$$\begin{array}{l}
\text { Standard cost par unit: }\
\begin{array} { l l l } 
\text { Variable partion } & 2 \text { hours @ } \$ 3 = & \$ 6 \
\text { Fixed portion } & 2 \text { hours@ } \$ 5 = &\underline{ \$ 0}
\end{array}
\end{array}$$
                                                                                                             $\underline{\$ 16}$

During November,90,000 units were scheduled for production,but only 80,000 units were actually produced.The following data relate to November:
Actual machine hours used were 165,000.
Actual overhead incurred totaled $1,378,000 ($518,000 variable plus $860,000 fixed).
All inventories are carried at standard cost.
Refer to Texas Metal Company.The fixed overhead spending variance for November was

Quizplus · Accepted Answer

The fixed overhead spending variance is calculated as the difference between the actual fixed overhead costs and the budgeted (or standard) fixed overhead costs. The standard fixed overhead cost is based on the monthly capacity of 180,000 machine hours, with a rate of $5 per hour for 2 hours per unit. However, the information provided does not specify the standard fixed overhead cost directly, but we can calculate the actual spending variance with the given data.Actual fixed overhead costs were $860,000. To find the budgeted or standard fixed overhead costs for the actual production level, we use the total machine hours (180,000) and the fixed overhead rate ($5 per hour for 2 hours per unit). However, the calculation for the standard or budgeted fixed overhead cost is not directly provided in the question, leading to a need for clarification. Given the actual fixed overhead and assuming the budgeted fixed overhead was based on the planned production or capacity, we can infer the variance.Given the lack of direct information to calculate the standard fixed overhead for the actual hours worked or produced, we rely on the provided options to infer the correct answer. The correct calculation would involve comparing the actual fixed overhead costs to the budgeted fixed overhead costs for the actual activity level. Since the actual fixed overhead was $860,000, and without the specific budgeted fixed overhead cost provided, we look at the options for a plausible variance calculation.Option B suggests a $40,000 Favorable (F) variance, implying that the actual fixed overhead costs were less than the budgeted fixed overhead costs by $40,000. This would be the case if the budgeted fixed overhead were higher than the actual fixed overhead incurred, indicating more efficient or lower spending than planned. Given the information and options provided, option B is selected based on the assumption that the actual spending was less than what was budgeted, leading to a favorable variance. However, it's important to note that without the explicit calculation of the budgeted fixed overhead for the actual activity level, this answer is inferred based on the options and the given data.

Texas Metal Company Texas Metal Company Has Developed Standard Overhead

Texas Metal Company
Texas Metal Company Has Developed Standard Overhead