Question

. Bartholomew Corp's master budget calls for the production of 6,000 units of products monthly. The master budget includes indirect labor of $396,000 annually; Bartholomew considers indirect labor to be a variable cost. During the month of September, 5,600 units of product were produced, and indirect labor costs of $30,970 were incurred. A performance report utilizing flexible budgeting would report a flexible budget variance for indirect labor of:

Answer 1

$170 Unfavorable

Step-by-step explanation:

Budgeted monthly indirect labor = $396,000/12 = $33,000

Budgeted indirect labor per unit = $33,000/6,000 = $5.5 per unit

Flexible budgeted cost = 5,600*$5.5 = $30,800

Flexible budget variance = Actual cost - Flexible cost

Flexible budget variance = $30,970 - $30,800

Flexible budget variance = $170 Unfavorable