Cannon Company's standard fixed overhead cost is $5 per direct labour hour on the basis of budgeted fixed costs of $500,000. The standard allows one direct labour hour per unit. During the current year, Cannon produced 110,000 units of product, incurred $550,000 of fixed overhead costs, and recorded 212,000 actual hours of direct labour.
-Refer to the Figure.What is Cannon's fixed overhead spending variance for the current year?
A)$24,000 (F)
B)$30,000 (U)
C)$50,000 (U)
D)$60,000 (F)

Question

Quizplus · Accepted Answer

The fixed overhead spending variance is calculated as the difference between the actual fixed overhead costs and the budgeted fixed overhead costs. The budgeted fixed overhead costs are $500,000, and the actual fixed overhead costs are $550,000. Therefore, the variance is $550,000 - $500,000 = $50,000 unfavorable (U).

Cannon Company's Standard Fixed Overhead Cost Is $5 Per Direct