The next two questions are based on the following: Crawford Company\'s standard

Question

The next two questions are based on the following: Crawford Company's standard fixed overhead cost is $6 per direct labor hour based on budgeted fixed costs of $600,000. The standard allows one direct labor hour per unit. During 2006, Crawford produced 110,000 units of product, incurred $630,000 of fixed overhead costs, and recorded 212,000 actual hours of direct labor.

10a. What is Crawford's fixed overhead spending variance for 2011? (Ans: $30,000 U)

10b. What is Crawford's fixed overhead volume variance for 2011? (Ans: $60,000 F)

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Explanation / Answer

Answer:- 10a)-Fixed Overhead Expenditure Variance:

= Actual Fixed Overheads - Budgeted Fixed Overheads

=$630000-$600000

=$30000 Unfavourable

10b)-Fixed Overhead Volume Variance

=

Absorbed Fixed overheads

-

Budgeted Fixed Overheads

=($110000 units*$6 per unit)- $60000

=$60000 Favourable

Where:-

Absorbed Fixed overheads

10b)-Fixed Overhead Volume Variance

=

Absorbed Fixed overheads

-

Budgeted Fixed Overheads

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