22

H&X Co. uses a standard job cost system with a normal capacity of 25,100 direct labour hours. H&X Co. produces 12,000 units, which cost $207,900 for direct labour (23,100 hours), $27,480 for variable overhead, and $139,200 for fixed overhead. The standard variable overhead per unit is $2 (2 hours at $1 per hour), and the standard fixed overhead per unit is $10.30 (2 hours at $5.15 per hour).

Calculate the fixed overhead spending (budget) variance.

Fixed overhead spending variance$

Unfavourable

Neither favourable nor unfavourable

Favourable