Taken from Becker ch. 5 hw:

Water Control, Inc. manufactures pumps & uses a standard cost system.  The standard factory OH costs per water pump are based on DLH's and are shown below:

VOH (4hrs @ $8/hr)         $32

FOH (4hrs @ $*5/hr)         20

     Total OH cost /unit      52

* Based on capacity of 100,000 DLH's/month

Following info is available for mo. of Nov.

-22,000 pumps were produced although 25,000 had been scheduled for production.

-94,000 DLH's were worked at a total cost of $940,000.

-The standard DL rate is $9/hr.

-The standard DL time per unit is four hrs.

-VOH costs were $740,000

-FOH costs were $540,000

The FOH spending variance for Nov. was:

A: 40K Unfavorable

B: 70K Unfavorable

C: 240K Unfavorable

D: 15K Favorable

And the answer is "a" $40K Unfavorable. 

They took --

Actual Fixed overhead      $540,000

Budgeted fixed overhead-

(100,000 DL hrs. x $5/hr)   500,000

Unfavorable Variance          40,000

Okay - I get that the spending variance is the difference between Actual OH and Budgeted actual OH (based on Actual hrs.)

Isn't the formula for the "actual hrs standard" = Standard FOH rate x ACTUAL DLH hrs ??? If so why not take $5 x 94,000 hrs. of labor. to come up w/ 70K unfavorable as the answer?

Then there is another question: CPA-03845 that doessss use the 94,000 for actual hrs. worked.

I'm sooo confused! Help! 

FOH spending variance = actual - budgeted
budgeted here means just that: budgeted. Not standard or applied, not flexible budget, so no actuals, just budgeted: $5/hr*100k budgeted 100k DLHs/month.

I think you are confusing fixed OH spending variance with variable OH spending variance.  Question CPA-03845 is asking for variable OH spending variance. The question you posted is asking for fixed OH spending variance.  Formula for Variable OH spending variance is (actual rate - standard rate)*(actual hours) = (740/94 - 8)*94k ...

FYI Question CPA-04158 has a nice diagram of the different types of overhead variances.

Yes I definitely was! Thank you Thank you Thank you!!

Isn't budgeted and standard the same? For example-would budgeted amount of $2 be the same as standard amount of $2, aren't they synonymous?

Not quite.  When you are talking about variable costs using standard costing, a flexible budget is being used.  A flexible budget adjusts itself with different levels of activity.  Here, the budgeted amount becomes the (standard quantity of inputs allowed given actual output)*(standard rate).  So the budgeted amount changes as activitity changes as variable costs change with different activity levels within the relevant activity range.

However, fixed costs are a different story, because by definition, fixed costs remain fixed across all activity levels within the relevant activity range.  So the "budgeted" amount here is just one number, like the $500k in the original problem, that does not change with different activity levels.

With fixed overhead, there is an additional "volume variance" that takes the difference between the budgeted amount and the amount that would have been spent using standard rates if we adjusted for actual activity level.  This is not a spending variance but a volume variance that measures the cost of failure to operate at the budgeted activity level.