Warner CoHas Budgeted Fixed Overhead of $150,000

question 106

Multiple Choice

Warner Co.has budgeted fixed overhead of $150,000.Practical capacity is 6,000 units,and budgeted production is 5,000 units.During February,4,800 units were produced and $155,600 was spent on fixed overhead.What is the total fixed overhead capacity variance?

• A)$5,000 unfavorable
• B)$5,600 unfavorable
• C)$25,000 unfavorable
• D)$30,000 unfavorable

---

Definitions:

AMT Adjustments

Adjustments required for calculating the Alternative Minimum Tax, an alternative tax system designed to ensure that certain taxpayers pay at least a minimum amount of tax.

Standard Deduction

A fixed dollar amount that reduces the income that is subject to tax and varies according to the taxpayer's filing status.

Taxable Income

The portion of income used to calculate how much tax an individual or a company owes to the government in a given tax year.

AMTI

Alternative Minimum Taxable Income; an income calculation used to ensure that high-income earners pay a minimum amount of tax.