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Kenney Co. uses a standard cost system. Standard direct labor hours are the basis for applying...

Kenney Co. uses a standard cost system. Standard direct labor hours are the basis for applying overhead to production. The fixed overhead budget for the year is $450,000 and the expected activity level was 30,000 hours. Each unit of product is expected to use 2 hours of direct labor.

Actual production was 14,500 units and the actual fixed overhead cost was $420,000.

Required: Be sure to label each variance as F – favorable or U – unfavorable

1. What is the standard fixed overhead rate per direct labor hour?

2. How many labor hours should it have taken to produce 14,500 units?

3. What is the fixed overhead budget or spending variance?

4. What is the fixed overhead volume variance?

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