Underfoot Products Uses Standard Costing Compute the Fixed Overhead Budget Variance

question 66

Multiple Choice

Underfoot Products uses standard costing. The following information about overhead was generated during May: $\begin{array}{ll}\text { Standard variable overhead rate } & \$ 2 \text { per machine hour } \\\text { Standard fixed overhead rate } & \$ 1 \text { per machine hour } \\\text { Actual variable overhead costs } & \$ 390,000 \\\text { Actual fixed overhead costs } & \$ 175,000 \\\text { Budgeted fixed overhead costs } & \$ 190,000 \\\text { Standard machine hours per unit produced } & 10 \\\text { Good units produced } & 18,000 \\\text { Actual machine hours } & 200,000\end{array}$ Compute the fixed overhead budget variance.

• A) $5,000 (F)
• B) $5,000 (U)
• C) $10,000 (F)
• D) $15,000 (F)

---

Definitions:

Heating System

A mechanism for maintaining temperatures at an acceptable level; by using thermal energy within a home, building, or other dwelling.

Required Rate Of Return

The minimal annual profit rate required to attract investment from individuals or corporations into a specific security or initiative.

Net Present Value

A financial analysis technique used to estimate the viability of projects or investments by discounting expected future cash flows to their present value.

Payback Period

The duration of time it takes to recoup the initial investment in a project or asset.