QUESTION

Jones Company allocates manufacturing overhead based on machine hours. Each chair produced should require 3 machine hours. According to the static budget, the following is expected to incur:

1,200 machine hours per month (400 chairs x 3 hours per chair) $6,000 in variable manufacturing overhead costs $8,400 in fixed manufacturing overhead costs

During January, Jones Company actually used 1,100 machine hours to make 410 chairs. The company spent $5,800 in variable manufacturing overhead costs and $8,100 in fixed manufacturing overhead costs.

What is the fixed overhead cost variance?

ANSWER

• $300 U

• $200 F

• $200 U

• $300 F

• I DON'T KNOW YET