Underfoot Products uses standard costing. The following information about overhead was generated during May: $\begin{array}{c}
\begin{array}{lrr}
\text {Standard variable overhead rate } &\
\text { Standard fixed overhead rate} &\
\text { Actual variable overhead costs} &\
\text { Actual fixed overhead costs} &\
\text { Budgeted fixed overhead costs} &\
\text { Standard machine hours per unit produced } &\
\text { Good units prockuced } &\
\text { Actual machine hours } \end{array}
\begin{array}{lll}
\text { \$ 2 per machine hours }\
\text {\$ 1 per machine hours}\
\$ 390,000\
\$ 175,000 \
\$ 190,000\
10\
18,000\
195,000
\end{array}

\end{array}$
- Compute the fixed overhead variance.

Question

Underfoot Products uses standard costing. The following information about overhead was generated during May: $\begin{array}{c}
\begin{array}{lrr}
  \text {Standard variable overhead rate  } &\
 \text {  Standard fixed overhead rate} &\
 \text {  Actual variable overhead costs} &\
 \text {  Actual fixed overhead costs} &\
 \text {  Budgeted fixed overhead costs} &\
 \text { Standard machine hours per unit produced } &\
 \text { Good units prockuced } &\
 \text { Actual machine hours } \end{array}
\begin{array}{lll}
  \text { \$ 2 per machine hours }\
  \text {\$ 1 per machine hours}\
\$ 390,000\
\$ 175,000 \
 \$ 190,000\
10\
18,000\
195,000 
\end{array}

\end{array}$
- Compute the fixed overhead variance.

Quizplus · Accepted Answer

The fixed overhead variance is calculated as the difference between the actual fixed overhead costs and the budgeted fixed overhead costs. In this case, the actual fixed overhead costs are $175,000 and the budgeted fixed overhead costs are $190,000. Therefore, the fixed overhead variance is $190,000 - $175,000 = $15,000 favorable (F), indicating that the actual costs were less than the budgeted costs. However, there seems to be a mistake in my calculation as none of the provided options match the calculated variance of $15,000. Based on the options given, the correct approach to match an option would be to reassess the calculation or the interpretation of the options provided. Given the data and typical calculation methods, a direct match to the options is not found, suggesting a need for clarification or correction.

Underfoot Products Uses Standard Costing - Compute the Fixed Overhead Variance