The following data is available regarding X Company' utility cost in 2017: Estimated production 3,000 units Budgeted fixed costs $19,000 Budgeted total variable costs $20,340 Actual production 2,900 units Actual total costs $23,363 What was the flexible budget variance for total utility costs in 2017 (assume that a positive number means a favorable variance and a negative number means an unfavorable variance)?
| Variance for utility cost | = | Flexible budget costs - Actual costs | |||||||||
| = | $ 38,662 | - | $ 23,363 | ||||||||
| = | $ 15,299 | ||||||||||
| Working: | |||||||||||
| # 1 | Budgeted Variable cost per unit | = | Total Budgeted Variable costs / Estimated Production | ||||||||
| = | $ 20,340 | / | 3000 | ||||||||
| = | $ 6.78 | ||||||||||
| # 2 | Utility cost as per flexible budget | = | Fixed cost as per budget + (Actual production*budgeted variable cost per unit) | ||||||||
| = | $ 19,000 | + | (2900*6.78) | ||||||||
| = | $ 19,000 | + | $ 19,662 | ||||||||
| = | $ 38,662 | ||||||||||
| Note: | Fixed costs do not change in flexible budget. | ||||||||||
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