Barley Hopp had the following actual results last year: 2a Calculate the fixed o

Question

Barley Hopp had the following actual results last year:

2a Calculate the fixed overhead spending variance for Barley Hopp.

2b Calculate the fixed overhead volume variance for Barley Hopp.

2c Calculate the total over- or underapplied fixed manufacturing overhead for Barley Hopp.

Standard Quantity Standard Price (Rate) Standard Unit Cost Direct materials (clay) 1.7 lbs. $ 1.80 per lb. $ 3.06 Direct labor 1.7 hrs. $ 15 per hr. 25.50 Variable manufacturing overhead (based on direct labor hours) 1.7 hrs. $ 1.4 per hr. 2.38 Fixed manufacturing overhead ($346,500 ÷ 165,000 units) 2.10

Explanation / Answer

2a) Fixed overhead spending variance=Actual fixed overhead expenses-standard fixed overhead expenses

=340000-346500=$6,500 Favorable

2b) Fixed overhead volume variance= Actual no. of units* fixed overhead rate per unit-budgeted fixed overhead expenses

=170000*2.1-346500=$10,500 Favorable

2c) Total fixed overhead variance= Actual no. of units* fixed overhead rate per unit-actual fixed overhead expenses

=170000*2.1-340000=$17,000 Favorable

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