Andy\'s Basketball Manufacturing Company reported: Actual fixed overhead $500,00
ID: 2468699 • Letter: A
Question
Andy's Basketball Manufacturing Company reported:
Actual fixed overhead $500,000
Fixed manufacturing overhead spending variance $30,000 unfavorable
Fixed manufacturing production-volume variance $20,000 unfavorable
To isolate these variances at the end of the accounting period, Brandon would:
A) debit Fixed Manufacturing Overhead Allocated for $500,000
B) debit Fixed Manufacturing Overhead Spending Variance for $30,000
C) credit Fixed Manufacturing Production-Volume Variance for $20,000
D) credit Fixed Manufacturing Control Allocated for $450,000
I know the answe is B, but WHY?
Explanation / Answer
The correct answer is B) Debit Fixed Manufacturing Overhead Spending Variance for $ 30,000.
Unfavorable variances are always debited since, they have the effect of increasing costs and expenses and reducing profit.