Question

Stone Industries uses flexible budgets. At normal capacity of 16,000 units, budgeted manufacturing overhead is: $48,000 variable and $270,000 fixed. If Stone had actual overhead costs of $321,000 for 18,000 units produced, what is the difference between actual and budgeted costs?

Answer 1

$3,000 favorable

Step-by-step explanation:

The computation of actual and budgeted costs is shown below:-

Budgeted Actual

(18,000 units) (18,000 units)

Variable $54,000

($48,000 ÷ $16,000) × $18,000

Fixed $270,000

Total $324,000 $321,000

Therefore, Actual cost is less than Budgeted, so the difference between actual and budgeted costs is $3,000 is favorable.