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Hi Sir,
Not sure I understand how you arrived to the answer of Chapter 22 question 8
A company operates a standard marginal costing system. Last month actual fixed overhead expenditure was
2% below budget and the fixed overhead expenditure variance was $1,250.
What was the actual fixed overhead expenditure for last month?
A $61,250
B $62,475
C $62,500
D $63,750Thanks
So this is how i did it. Long but easy too understand i will say
first lets suppose budgeted overhead is x.
As question suggestion actual expenditure is 2% less than budget
which will gives us :- actual overhead = x – 2%xnow, when the overhead cost lower than what we’ve expected, that would certainly means it is good for us so a positive figure for that
so finally we can work it out this from
budgeted FOH – actual FOH = 1250
which again is : x-x-2%x=1250
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