Danske Company Had Total Underapplied Overhead of $15,000 What Is the Fixed Overhead Spending (Budget)variance for May?
A)

question 93

Multiple Choice

Danske Company had total underapplied overhead of $15,000.Additional information is as follows: $$\begin{array} { | l | r | } \hline \text { Denominator hours for May } & 15,000 \\\hline \text { Actual hours worked during May } & 14,000 \\\hline \text { Standard hours allowed for May } & 12,000 \\\hline \text { Flexible budget fixed overhead cost } & \$ 45,000 \\\hline \text { Actual fixed overhead costs for May } & \$ 48,000 \\\hline\end{array}$$
$\begin{array}{|l|l|}\hline \text { Variable Overheact } & \\\hline \begin{array}{l}\text { Applied based on standard direct labor hours } \\\text { allowed }\end{array} & \$ 42,000 \\\hline \begin{array}{l}\text { Budgeted based on standard direct labor hours }\end{array} & 38,000 \\\hline \text { Fixed Overhead: } & \\\hline \begin{array}{l}\text { Applied based on standard direct labor hours } \\\text { allowed }\end{array} & \$ 30,000 \\\hline \begin{array}{l}\text { Budgeted based on standard direct labor hours }\end{array} & 27,000 \\\hline\end{array}$ What is the fixed overhead spending (budget) variance for May?

• A) $1,000 unfavorable.
• B) $3,000 unfavorable.
• C) $2,000 unfavorable.
• D) $2,000 favorable.

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Definitions:

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