Lemmiwinks Industries has a standard cost system in which it applied overhead on the basis of direct labor hours. It expected to have 40,000 direct labor hours for the year (denominator hours). It had the following data additional.
Expected overhead costs
Variable Manufacturing Overhead Costs: $70,000
Fixed Manufacturing Overhead Cost: $130,000
Operating Results for Activity
Actual Direct Labor hours: 45,000
Standard Direct Labor Hours: 48,000
Operating Results for Cost
Actual variable manufacturing overhead incurred: $101,250
Actual fixed manufacturing overhead costs incurred: $150,000
What is the fixed overhead budget variance?The answer is: $20,000 U, but how do you get this?