Answer:
Jone Manufacturing
Total Overhead Variance = $2,000U.
Explanation:
Variance is the difference between budgeted and actual expense. Â It is favorable when the actual is less than the budgeted amount. Â It is unfavorable when the actual is more than the budgeted amount. Â It is neither favorable nor unfavorable when the actual equals the budgeted amount.
Variance analysis as a budgeting tool is used to evaluate the performance of management in managing costs, relative to the activity levels. Â
In Jones Manufacturing, actual and budgeted costs are calculated as follows:
Actual costs:
Fixed overhead = $8,000
Variable overhead = $4,600
Total = $12,600
Budget costs:
Fixed overhead = $10,000 (2,000 hours x $5)
Variable overhead = $4,600
Total = $14,600
Variance = budgeted overhead minus actual overhead
= $14,600 - $12,600 = $2,000U
