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Royall Control Company, which manufactures electrical switches, uses a standard cost system in which manufacturing overhead costs are applied to units of product on
Royall Control Company, which manufactures electrical switches, uses a standard cost system in which manufacturing overhead costs are applied to units of product on the basis of machine hours (MHs). Budgeted machine hours per month is 300,000 hours. The standard overhead costs are shown below: Variable overhead (5 MHs @ $8.00 per MH) $40 Fixed overhead (5 MHs @ $12.00 per MH) $60 The following information is available for the month of October Plans had called for the production of 60,000 switches. 56,000 switches were actually produced. 275,000 machine hours were used for production of 56,000 switches. Actual variable overhead costs were $2,340.000 Actual fixed overhead costs were $3,750,000. Compute the fixed overhead spending variance for October. Indicate if it is favorable (F) or unfavorable (U). Example of Answer: 4000U 4000F (No comma, space, decimal point, or $ sign) Answer: 240000U
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