Robert Inc.uses the standard costing method.The company's main product is a fine-quality headphones that normally takes 0.5 hour to produce.Normal annual capacity is 5,000 direct labor hours,and budgeted fixed overhead costs for the year were $8,750.During the year,the company produced and sold 5,800 units.Actual fixed overhead costs were $6,000.
-Using the information provided for Robert Inc,compute the fixed overhead budget variance.
A)$925 (U)
B)$3,675 (U)
C)$2,750 (F)
D)$5,800 (U)

Question

Robert Inc.uses the standard costing method.The company's main product is a fine-quality headphones that normally takes 0.5 hour to produce.Normal annual capacity is 5,000 direct labor hours,and budgeted fixed overhead costs for the year were $8,750.During the year,the company produced and sold 5,800 units.Actual fixed overhead costs were $6,000. 
-Using the information provided for Robert Inc,compute the fixed overhead budget variance.
A)$925 (U)
B)$3,675 (U)
C)$2,750 (F)
D)$5,800 (U)

Quizplus · Accepted Answer

Fixed overhead budget variance can be calculated as:
Fixed Overhead Budget Variance = Budgeted Fixed Overhead Costs - Actual Fixed Overhead Costs

Budgeted Fixed Overhead Costs = $8,750
Actual Fixed Overhead Costs = $6,000

Fixed Overhead Budget Variance = $8,750 - $6,000 = $2,750 (F)

Therefore, the best answer is C as it is the only option that matches the calculated result.