Somalian Corporation Uses a Standard Costing System

question 84

Multiple Choice

Somalian Corporation uses a standard costing system. Information for the month of May is as follows: Actual manufacturing overhead costs ($26,000 is fixed) $80,000 Direct labor:
Actual hours worked 12,000 hrs.
Standard hours allowed for actual production 10,000 hrs.
Average actual labor cost per hour $18
The factory overhead rate is based on a normal volume of 12,000 direct labor hours. Standard cost data at 12,000 direct labor hours were as follows:
Variable factory overhead $48,000
Fixed factory overhead 24,000
Total factory overhead $72,000
What is the fixed overhead spending variance for Somalian?

• A) $4,000 (U)
• B) $8,000 (U)
• C) $2,000 (U)
• D) $20,000 (U)

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