Q. 16

Bonita Co. uses a standard job cost system with a normal capacity of 25,900 direct labour hours. Bonita Co. produces 12,700 units, which cost $213,300 for direct labour (23,700 hours), $28,829 for variable overhead, and $139,065 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 $10.20 (2 hours at $5.10 per hour). Calculate the fixed overhead spending (budget) variance andstate whether it is Favourable, unfavourable or neither.