If a company has a budgeted production of 1,000 units and actual production of 1,200 units, what is the variance in fixed overhead costs if the budgeted fixed overhead is $5,000?
Practice Questions
1 question
Q1
If a company has a budgeted production of 1,000 units and actual production of 1,200 units, what is the variance in fixed overhead costs if the budgeted fixed overhead is $5,000?
$0
$500
$1,000
$1,200
Fixed overhead costs remain the same regardless of production levels, so the variance is $0.
Questions & Step-by-step Solutions
1 item
Q
Q: If a company has a budgeted production of 1,000 units and actual production of 1,200 units, what is the variance in fixed overhead costs if the budgeted fixed overhead is $5,000?
Solution: Fixed overhead costs remain the same regardless of production levels, so the variance is $0.
Steps: 5
Step 1: Understand that fixed overhead costs do not change with the number of units produced.
Step 2: Identify the budgeted fixed overhead cost, which is $5,000.
Step 3: Recognize that the actual production of 1,200 units does not affect the fixed overhead cost.
Step 4: Calculate the variance by comparing budgeted fixed overhead ($5,000) with actual fixed overhead (also $5,000).
Step 5: Since both values are the same, the variance is $0.
