Question

Easel Manufacturing budgeted fixed overhead costs of

$ 2.50$2.50

per unit at an anticipated production level of

1 comma 4501,450

units. In July Easel incurred actual fixed overhead costs of

$ 4 comma 900$4,900

and actually produced

1 comma 1001,100

units.

What is​ Easel's fixed overhead budget variance for​ July?

A.

$ 1 comma 275.00$1,275.00

favorable

B.

$ 1 comma 275.00$1,275.00

unfavorable

C.

$ 2 comma 150.00$2,150.00

favorable

D.

$ 2 comma 150.00$2,150.00

unfavorable

Answer 1

B. $1,275.00 unfavorable

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

Fixed overhead budget variance = $4,900 - ($2.50 * 1,450)

Fixed overhead budget variance = $1,275 U