Asset Rich Ltd is a capital-intensive firm. Indirect costs make up nearly 70% of the product costs. The company has no direct material costs because customers provide the direct materials used for each job. To plan and control such costs, the firm employs flexible budgets and standard costs. Overhead rates, based on direct labour hours, are derived from the master budget.

Master Budget Actual Results

Units produced 4,000 3,620

Direct Labour Hours 10,000 11,000

Fixed Overhead $200,000 $205,000

Variable Overhead $320,000 $355,000

Direct Labour $200,000 $180,000

The fixed overhead spending variance was:

a. $5,000 F

b. $5,000 U

c. $24,000 U

d. $19,000 U