Fletcher Company Collected the Following Data Regarding Production of One

Fletcher Company collected the following data regarding production of one of its products. Compute the variable overhead cost variance. $\begin{array}{lrl}\text { Direct labor standard (2 hrs. @ } \$ 12.75 / \mathrm{hr} .) & \$ 25.50& \text { per finished unit} \\\text { Actual direct labor hours } & 81,500& \text { hrs.} \\\text { Budgeted units } & 42,000& \text { units} \\\text { Actual finished units produced } & 40,000 & \text { units}\\\text { Standard variable OH rate }(2 \mathrm{hrs} . @ \$ 14.30 / \mathrm{hr} .) & \$ 28.60& \text { per finished unit} \\\text { Standard fixed OH rate }(\$ 336,000 / 42,000 \text { units) } & \$ 8.00 & \text { per unit}\\\text { Actual cost of variable overhead costs incurred } & \$ 1,140,000 \\\text { Actual cost of fixed overhead costs incurred } & \$ 338,000\end{array}$

A) $18,000 favorable.
B) $4,000 favorable.
C) $18,000 unfavorable.
D) $18,300 favorable.
E) $14,300 unfavorable.

Correct Answer:

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