Homework Answers
(1)
Fixed overhead rate based on practical capacity = Budgeted Fixed Overhead/Practical capacity
=$754000/29000
=$26 per unit
(2)
Fixed overhead spending variance = Budgeted Fixed Overhead - Actual Fixed Overhead
= $754000 - $702000
=$52000 Favorable
(3)
Expected (planned) capacity variance = Fixed OH rate x (Budgeted volume - Practical capacity)
= $26 x (21000 - 29000)
= $208000 Unfavorable
(4)
Unexpected (unplanned) capacity variance = Fixed OH rate x (Actual volume - Budgeted volume)
= $26 x ($24000 - $21000)
= $78000 Favorable
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