Question

The Tree Company provides the following standard cost data per unit of product: Variable overhead $ 8.00 Tree Co. anticipated that they would produce and sell 24,000 units. During the period, the company produced and sold 25,000 units, incurring $210,000 of variable overhead costs. The variable overhead flexible budget variance was: A. $8,000 unfavorable. B. $10,000 unfavorable. C. $8,000 favorable. D. $10,000 favorable.

Answer 1

Flexible budget variance= $10,000 unfavorable

Step-by-step explanation:

Giving the following information:

Standard Variable overhead= $8.00 per unit

During the period, the company produced and sold 25,000 units, incurring $210,000 of variable overhead costs.

First, we need to calculate the standard variable overhead cost:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 8*25,000

Allocated MOH= $200,000

Now, the flexible budget variance:

Flexible budget variance= allocated overhead - actual overhead

Flexible budget variance= 200,000 - 210,000

Flexible budget variance= $10,000 unfavorable