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If the budgeted fixed costs are $50,000 and the actual fixed costs are $55,000,

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Question: If the budgeted fixed costs are $50,000 and the actual fixed costs are $55,000, what is the fixed cost variance?

Options:

  1. $5,000 Favorable
  2. $5,000 Unfavorable
  3. $50,000 Favorable
  4. $50,000 Unfavorable

Correct Answer: $5,000 Unfavorable

Solution: 

The fixed cost variance is calculated as Actual Fixed Costs - Budgeted Fixed Costs, which is $55,000 - $50,000 = $5,000 Unfavorable.

If the budgeted fixed costs are $50,000 and the actual fixed costs are $55,000,

Practice Questions

Q1
If the budgeted fixed costs are $50,000 and the actual fixed costs are $55,000, what is the fixed cost variance?
  1. $5,000 Favorable
  2. $5,000 Unfavorable
  3. $50,000 Favorable
  4. $50,000 Unfavorable

Questions & Step-by-Step Solutions

If the budgeted fixed costs are $50,000 and the actual fixed costs are $55,000, what is the fixed cost variance?
  • Step 1: Identify the budgeted fixed costs, which are $50,000.
  • Step 2: Identify the actual fixed costs, which are $55,000.
  • Step 3: Subtract the budgeted fixed costs from the actual fixed costs: $55,000 - $50,000.
  • Step 4: Calculate the result, which is $5,000.
  • Step 5: Determine if the variance is favorable or unfavorable. Since actual costs are higher than budgeted costs, it is unfavorable.
  • Fixed Cost Variance – The difference between actual fixed costs and budgeted fixed costs, indicating whether costs were higher or lower than planned.
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