The Littlefield Company applies manufacturing overhead costs to products on the basis of direct labor-hours. The standard cost card shows that 12 direct labor-hours are required per unit of product. For August, the company budgeted to work 360,000 direct labor-hours and to incur the following total manufacturing overhead costs:
Total fixed overhead costs $475,200
Total variable overhead costs $396,000
During August, the company completed 28,000 units of product, worked 344,000 direct labor-hours, and incurred the following total manufacturing overhead costs:
Total fixed overhead costs $461,200
Total variable overhead costs $395,600
The denominator activity in the predetermined overhead rate is 360,000 direct labor-hours. (Note that this is the same data that was provided for the previous question.) The fixed overhead budget variance for August is:
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