Megan, Inc

question 127

Multiple Choice

Megan, Inc. uses the following standard costs per unit for one of its products: Direct labor (2.0 hrs. @ $5.00/hr.) = $10.00; overhead (2.0 hrs. @ $2.50/hr.) = $5.00. The flexible budget for overhead is $120,000 plus $1.00 per direct labor hour (DLH) . Actual data for the past month show total overhead costs of $225,000, total fixed overhead of $123,000, 85,000 hours worked, and 40,000 units produced.

The fixed overhead spending variance for Megan, Inc. for the past month, to the nearest whole dollar, was:

• A) $0.
• B) $3,000 unfavorable.
• C) $5,000 unfavorable.
• D) $17,000 unfavorable.
• E) $25,000 unfavorable.

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