Question 30

International FunCompany

International Fun Company has developed standard overhead costs based on a budget of180,000 machine hours as follows:

Standard costs per unit:

Variable portion 2 hours @ $3 = $6

Fixed portion 2 hours @ $5 = 10 $16

During January,90,000 units were scheduled for production, but only 80,000 units were actually produced. The following data relate to January:

Actual machine hours used were 165,000.

Actual overhead incurred totaled $1,378,000 ($518,000 variable plus $860,000 fixed).

All inventories are carried at standard cost.

Refer to International Fun Company. The fixed overhead spending variance for January was?

a. $40,000 F.

b. $60,000 U.

c. $60,000 F.

d. $40,000 U.