Solution and Explanation:
The following table has been made in order to find out the total variance cost that has been incurred and the total cost
Particulars Cost formula based Flexible budget Actual Variance
on 50000 units on the basis of
60000 unit
Direct materials $2 120000 $110000 10000 F
The direct labour $1 60000 60000 0
Variable overhead $1.5 90000 100000 10000 U
Fixed overhead $100000 100000 97000 3000 F
The total cost 370000 367000 3000 F
Where F stands for – favourable and U stands for unfavourable
The total variance cost after the above calculations is = $3000 F