Question - You have started working as a cost accountant for a firm that has only been in business for one month. The firm is able to buy a new type of biodegradable plastic at a fixed price of $100 per roll. The plastic is then cut and sealed to make garbage bags. Fixed factory overhead is estimated to be $125,000 per month. During this past month, 8,000 cartons of garbage bags were produced, which represents 80% of the activity volume. You are given the following information:
Rolls of plastic used 40
Variable overhead incurred $61,000
Overhead efficiency variance $5,000U
Standard costs per carton of garbage bags:
Labour hours 2
Wage rate $8per hour
Total overhead $20
Rolls of plastic 0.004rolls
Calculate the following: Fixed overhead budget variance $___________ (favourable, unfavourable or neither).