Question - Standard Company has developed standard manufacturing overhead costs based on a capacity of 180,000 direct labor hours as follows:
Standard overhead costs per unit:
Variable portion 2 hours @ $3 = $ 6 per unit
Fixed portion 2 hours @ $5 = $10 per unit
The following data pertain to operations in April:
Actual output 80,000 units
Actual direct labor cost $644,000
Actual direct labor hours worked 165,000 hours
Actual variable overhead cost incurred $518,000
Actual fixed overhead cost incurred $860,000
The fixed overhead budget variance for April was:
$60,000 favorable.
$40,000 favorable.
$60,000 unfavorable.
$40,000 unfavorable.