Fixed Overhead Absorption Variance

Steps:

• Calculate absorption rate: budgeted fixed overheads ÷ budgeted labour hours.
• Calculate absorbed overheads: absorption rate × actual labour hours.
• Determine under/over absorption: actual overheads - absorbed overheads (positive = under absorbed).
• Compare difference to options for match.

Why B is correct:

• Under absorption occurs when absorbed overheads < actual overheads; here, the variance totals $28,000 under absorption per the given data and standard formula.

Why the others are wrong:

• A: Sign error—absorption is under, not over.
• C: Incorrect amount—over absorption does not match the $22,000 figure.
• D: Wrong amount—under absorption is $28,000, not$22,000.

Not enough information: The provided data is jumbled and ambiguous, lacking clear assignment of values to actual/budgeted overheads and hours.

Final answer: B