Croissant Company's Standard Fixed Overhead Cost Is $6 Per Direct

question 71

Multiple Choice

Croissant Company's standard fixed overhead cost is $6 per direct labor hour based on budgeted fixed costs of $600,000. The standard allows one direct labor hour per unit. During 2014, Crawford produced 110,000 units of product, (within the relevant range of activity) incurred $630,000 of fixed overhead costs, and recorded 212,000 actual hours of direct labor. What is Croissant's fixed overhead spending variance for 2014?

• A) $60,000 (F)
• B) $24,000 (F)
• C) $30,000 (U)
• D) $36,000 (U)

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Definitions:

Product

A good or service that is created, offered, and sold to customers.

Activity-Based Costing

A pricing strategy where the organization's activities are pinpointed, and the costs for these activities are distributed across all products and services based on their respective consumption levels.

Unit Product Cost

The sum of all expenses, such as materials, labor, and overhead, divided by the total units manufactured.

Product N0

The identification or reference number assigned to a specific product or item.