The following information pertains to the Braun Company for March: Using the four-variance method of factory overhead variance analysis,what is the fixed overhead spending variance?

Question

The following information pertains to the Braun Company for March:  Using the four-variance method of factory overhead variance analysis,what is the fixed overhead spending variance?

Quizplus · Accepted Answer

The four-variance method of factory overhead variance analysis includes the following variances:

1. Fixed Overhead Spending Variance 
2. Fixed Overhead Efficiency Variance 
3. Variable Overhead Spending Variance 
4. Variable Overhead Efficiency Variance

To calculate the fixed overhead spending variance, we need to compare the actual fixed overhead cost incurred with the budgeted fixed overhead cost for the month:

Actual fixed overhead cost = $41,800 
Budgeted fixed overhead cost = $40,000

Fixed overhead spending variance = Actual fixed overhead cost - Budgeted fixed overhead cost 
= $41,800 - $40,000 
= $1,800 unfavorable

Therefore, the best choice is B, $1,800 unfavorable.

The Following Information Pertains to the Braun Company for March