Buckingham Company Buckingham Company Uses a Standard Cost System for Its Production

question 55

Multiple Choice

Buckingham Company
Buckingham Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for May when Buckingham produced 4,500 units:

• A)$7,000 U
• B)$3,125 F
• C)$ 750 U
• D)$ 750 F

Standard:
DLH per unit	2.50
Variable overhead per DLH	$1.75
Fixed overhead per DLH	$3.10
Budgeted variable overhead	$21,875
Budgeted fixed overhead	$38,750

Actual:
Direct labor hours	10,000
Variable overhead	$26,250
Fixed overhead	$38,000

Refer to Buckingham Company.Using the four-variance approach,what is the fixed overhead spending variance?

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Definitions:

Profit Motive

The primary incentive for businesses to operate and expand, driven by the pursuit of financial gain.

Pareto Efficient

A state of allocation of resources from which it is impossible to reallocate so as to make any one individual or preference criterion better off without making at least one individual or preference criterion worse off.

Net Benefit

The total positive impact of a decision or action, subtracting any costs or negative effects associated with it.

Trade

The exchange of goods, services, or both between parties, which can occur domestically or internationally.