Hamilton Pty Ltd uses a standard costing system for product costing.The company uses direct labour hours as the cost driver to apply overhead costs.The following amounts were budgeted for the year:
The following were the actual results:
Calculate the amount of fixed overhead budget variance.

A) $10 000 favourable
B) $10 000 unfavourable
C) $24 000 favourable
D) $34 000 unfavourable

Question

Hamilton Pty Ltd uses a standard costing system for product costing.The company uses direct labour hours as the cost driver to apply overhead costs.The following amounts were budgeted for the year:
The following were the actual results:
Calculate the amount of fixed overhead budget variance.

A) $10 000 favourable 
B) $10 000 unfavourable 
C) $24 000 favourable 
D) $34 000 unfavourable

Quizplus · Accepted Answer

To calculate the fixed overhead budget variance, we need to compare the budgeted fixed overhead cost with the actual fixed overhead cost incurred.

Budgeted fixed overhead cost = $400,000

Actual fixed overhead cost = $410,000

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

= $400,000 - $410,000

= $10,000 unfavorable

Therefore, the best choice is B, $10,000 unfavorable.

Hamilton Pty Ltd Uses a Standard Costing System for Product