Dean Company used a standard cost system to prepare the following budget at normal capacity for the month of May.
Actual data for May were as follows:
Determine the fixed overhead budget and volume variances.

Question

Dean Company used a standard cost system to prepare the following budget at normal capacity for the month of May. 
Actual data for May were as follows: 
Determine the fixed overhead budget and volume variances.

Quizplus · Accepted Answer

Fixed overhead budget variance = Actual fixed overhead cost - Budgeted fixed overhead cost

= $16,800 - ($4.50 per DLH x 4,200 DLH) = $16,800 - $18,900 = -$2,100 U

Fixed overhead volume variance = Budgeted fixed overhead cost - Fixed overhead applied based on DLH

= $18,900 - (($4.50 per DLH x 3,600 DLH) + ($4.50 per DLH x 600 DLH x 110%)) = $18,900 - $19,440 = -$540 U

Therefore, the best choice is C.

Dean Company Used a Standard Cost System to Prepare the Following