Zenith Fashions uses standard costs for their manufacturing division.From the following data,calculate the fixed overhead cost variance. $$\begin{array} { | l | r | }
\hline \text { Actual fixed overhead } & \$ 36,000 \
\hline \text { Budgeted fixed overhead } & \$ 21,000 \
\hline \text { Standard overhead allocation rate } & \$ 8 \
\hline \text { Standard direct labor hours per unit } & 4 \text { DLHr } \
\hline \text { Actual output } & 2,400 \text { units } \
\hline
\end{array}$$

Question

Zenith Fashions uses standard costs for their manufacturing division.From the following data,calculate the fixed overhead cost variance. $$\begin{array} { | l | r | } 
\hline \text { Actual fixed overhead } & \$ 36,000 \
\hline \text { Budgeted fixed overhead } & \$ 21,000 \
\hline \text { Standard overhead allocation rate } & \$ 8 \
\hline \text { Standard direct labor hours per unit } & 4 \text { DLHr } \
\hline \text { Actual output } & 2,400 \text { units } \
\hline
\end{array}$$

Quizplus · Accepted Answer

The fixed overhead cost variance is calculated as the difference between the actual fixed overhead and the budgeted (or standard) fixed overhead. The budgeted fixed overhead is given as $21,000. However, to find the budgeted fixed overhead based on actual output, we need to calculate the standard overhead cost for the actual output. The standard overhead cost for the actual output is calculated as the standard overhead allocation rate ($8) multiplied by the standard direct labor hours per unit (4 DLHr) and then multiplied by the actual output (2,400 units). This equals $76,800 ($8 * 4 * 2,400). The fixed overhead cost variance is then the actual fixed overhead ($36,000) minus this calculated standard cost for actual output ($76,800), which results in a variance of $15,000 unfavorable, since the actual fixed overhead is less than what was budgeted for the actual level of output.

Zenith Fashions Uses Standard Costs for Their Manufacturing Division A) $55,800 F B) $55,800 U C) $15,000 F D)

Zenith Fashions Uses Standard Costs for Their Manufacturing Division A) $55,800 F
B) $55,800 U
C) $15,000 F
D)