Question: Lynch Company established a predetermined fixed overhead cost rate of $58 per unit of product. The company planned to make 7,000 units of product but

Lynch Company established a predetermined fixed overhead cost rate of $58 per unit of product. The company planned to make 7,000 units of product but actually produced only 6,500 units. Actual fixed overhead costs were $424,000.

Required
a. Determine the fixed cost spending variance and indicate whether it is favorable or unfavorable. Explain what this variance means. Identify the manager(s) who is (are) responsible for the variance.
b. Determine the fixed cost volume variance and indicate whether it is favorable or unfavorable. Explain why this variance is important. Identify the manager(s) who is (are) responsible for the variance.

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a Actual fixed OH costs 424000 Budgeted fixed OH costs 7000 x 58 406000 Spending variance 18000 Unfa... View full answer

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