Question

Bartholomew Corporation’s master budget calls for the production of 6,000 units of product 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

a. $170 unfavorable
b. $170 favorable
c. $2,030 unfavorable
d. $2,030 favorable

Answer 1

Answer is A $170 unfavourable

Step-by-step explanation:

396,000/12*6,000

= $5.5 per unit

So flexible budget 5.5 *5,600 = 30,800

Variance = actual – flexible

= 30,970 – 30,800

= 170 (Unfavourable)