Question

2) A $5,000 unfavorable flexible-budget variance indicates that ________.

A) the flexible-budget amount exceeded actual variable manufacturing overhead by $5,000
B) the actual variable manufacturing overhead exceeded the flexible-budget amount by $5,000
C) the flexible-budget amount exceeded standard variable manufacturing overhead by $5,000
D) the standard variable manufacturing overhead exceeded the flexible-budget amount by $5,000

Answer 1

The answer is B) the actual variable manufacturing overhead exceeded the flexible-budget amount by $5,000.

Step-by-step explanation:

The correct answer is B) the actual variable manufacturing overhead exceeded the flexible-budget amount by $5,000.

In a flexible budget, the budgeted amount for variable manufacturing overhead is based on a predetermined rate per unit of activity. If the actual variable manufacturing overhead exceeds this budgeted amount, it creates an unfavorable variance.

For example, if the budgeted amount for variable manufacturing overhead is $10,000 and the actual variable manufacturing overhead is $15,000, then the unfavorable flexible-budget variance is $5,000.