Question

Lancelot Corporation manufactures tennis gear and uses budgeted machine-hours to allocate variable manufacturing overhead. The following information relates to the company's manufacturing overhead data: Budgeted output units 8,000 units Budgeted machine-hours 24,000 hours Budgeted variable manufacturing overhead costs for 8,000 units $288,000 Actual output units produced 8,500 units Actual machine-hours used 23,750 hours Actual variable manufacturing overhead costs $250,000 What is the flexible-budget amount for variable manufacturing overhead

Answer 1

The flexible-budget amount for variable manufacturing overhead is $285,625.

Step-by-step explanation:

The flexible-budget amount for variable manufacturing overhead can be calculated by multiplying the budgeted variable manufacturing overhead costs for 8,000 units by the actual machine-hours used, and then dividing by the budgeted machine-hours.

Formula: Flexible-Budget Amount = (Actual machine-hours used / Budgeted machine-hours) * Budgeted variable manufacturing overhead costs for 8,000 units

Using the given values, the calculation would be: (23,750 / 24,000) * $288,000 = $285,625

Answer 2

$56,000 Favorable

Step-by-step explanation:

The computation of the flexible-budget amount for variable manufacturing overhead is shown below

The Budgeted machine hours per unit os

= 24,000 ÷ 8,000

= 3

The Budgeted machine hours allowed for 8,500 units is

= 8,500 × 3

= 25,500

Now the Budgeted variable overhead rate per machine hour is

= $288,000 ÷ 24,000

= $12.00

Now

Flexible-budget amount is

= 25,500 × $12.00

= $306,000

So, the Flexible-budget variance is

= $250,000 - $306,000

= $56,000 Favorable