Bullseye Company manufactures dartboards. Its standard cost information follows

Question

Bullseye Company manufactures dartboards. Its standard cost information follows Standard Standard Price (Rate) Standard Unit Cost Quantity 2.00 sq. ft. 0.90 hrs. $ 0.90 per sq. ft $ 9.00 per hr Direct materials (cork board) S 1.80 Direct labor Variable manufacturing overhead (based on 0,90 hrs Fixed manufacturing overhead 8.10 0.45 0.15 S 0.50 per hr direct labor hours) ($12,450/83,000) Bullseye has the following actual results for the month of September. Number of units produced and sold Number of square feet of corkboard used Cost of corkboard used Number of labor hours worked Direct labor cost Variable overhead cost Fixed overhead cost 73,000 151,000 $152,000 78,000 $ 113,000 $ 117,800 $ 26,000 Required 1. Calculate the fixed overhead spending variance for Bullseye. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.) Fixed Overhead Spending Variance 2. Calculate the fixed overhead volume variance for Bullseye. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.) Fixed Overhead Volume Variance 3. Calculate the total over- or underapplied fixed manufacturing overhead for Bullseye. (Indicate the effect of each variance by selecting "F" for favorable/Overapplied and "U" for unfavorable/underapplied.) Total Fixed Overhead Variance

Explanation / Answer

1. Fixed Overhead Spending Variance: $13550 U

Budgeted fixed overhead - Actual fixed overhead cost incurred = $12450 - $26000 = $13550 U

2. Fixed Overhead Volume Variance: $1500 U

Budgeted fixed overhead - Overhead applied = $12450 - (73000 x $0.15) = $12450 - $10950 = $1500 U

3. Total Fixed Overhead Variance: $15050 U

$13550 U + $1500 U = $15050 U

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