The Dillon Company Makes and Sells a Single Product and Uses

Multiple Choice

The Dillon Company makes and sells a single product and uses a flexible budget for overhead to plan and control overhead costs. Overhead costs are applied on the basis of direct labour hours. The standard cost card shows that 5 direct labour hours are required per unit. The Dillon Company had the following budgeted and actual data for March:
$\begin{array} { | l | r | r | } \hline & \text { Actual } & \text { Budgeted } \\\hline \text { Units Produced } & 33,900 & 30,800 \\\hline \text { Direct Labour Hours } & 161,800 & 154,000 \\\hline \text { Variable Overhead Costs } & \$ 140,500 & \$ 123,200 \\\hline \text { Fixed Overhead Costs } & \$ 80,000 & \$ 77,000 \\\hline\end{array}$


-What was the fixed overhead budget variance for March?

A) $900 favourable.
B) $3,000 unfavourable.
C) $3,900 favourable.
D) $7,750 favourable.