The management of Earth Barber Lawnmowers has calculated the following variances: $$\begin{array} { | l | r | }
\hline \text { Direct materials cost variance } & \$ 10,000 \mathrm { U } \
\hline \text { Direct materials efficiency variance } & 35,000 \mathrm {~F} \
\hline \text { Direct labor cost variance } & 16,000 \mathrm {~F} \
\hline \text { Direct labor efficiency variance } & 12,000 \mathrm { U } \
\hline \text { Variable overhead cost variance } & 3000 \mathrm {~F} \
\hline \text { Variable overhead efficiency variance } & 6500 \mathrm {~F} \
\hline \text { Fixed overhead cost variance } & 4000 \mathrm {~F} \
\hline \text { Fixed overhead volume variance } & 2,500 \mathrm {~F} \
\hline
\end{array}$$ When determining the total product cost flexible budget variance,what is the total fixed overhead variance of the company?

Question

The management of Earth Barber Lawnmowers has calculated the following variances: $$\begin{array} { | l | r | } 
\hline \text { Direct materials cost variance } & \$ 10,000 \mathrm { U } \
\hline \text { Direct materials efficiency variance } & 35,000 \mathrm {~F} \
\hline \text { Direct labor cost variance } & 16,000 \mathrm {~F} \
\hline \text { Direct labor efficiency variance } & 12,000 \mathrm { U } \
\hline \text { Variable overhead cost variance } & 3000 \mathrm {~F} \
\hline \text { Variable overhead efficiency variance } & 6500 \mathrm {~F} \
\hline \text { Fixed overhead cost variance } & 4000 \mathrm {~F} \
\hline \text { Fixed overhead volume variance } & 2,500 \mathrm {~F} \
\hline
\end{array}$$ When determining the total product cost flexible budget variance,what is the total fixed overhead variance of the company?

Quizplus · Accepted Answer

The total fixed overhead variance is the sum of the fixed overhead cost variance and the fixed overhead volume variance. Here, the fixed overhead cost variance is $4000 F and the fixed overhead volume variance is $2500 F. Adding these together gives a total fixed overhead variance of $6500 F. However, the correct choice as per the options provided is $4000 F, indicating a possible mistake in the question's details or in the interpretation of the options. The correct calculation based on the provided variances should indeed result in $6500 F, but since that option is not listed correctly, the closest correct option based on the provided details is $4000 F, which only accounts for the fixed overhead cost variance, not the total fixed overhead variance.

The Management of Earth Barber Lawnmowers Has Calculated the Following