Question

X Company's 2019 budgeted overhead cost function was C=$10.90X + $212,800, where X is the number of units produced. The following information is also available for 2019:

Master Actual   

Budget Results

Production 11,000 units 14,000 units

Total variable costs $119,900 $142,101

Total fixed costs $212,800 $215,271

1. What was the total overhead static budget for 2019?

A: $152,600 B: $332,700 C: $335,171 D: $357,372 E: $365,400 F: $367,871

Tries 0/99

2. What was the total overhead flexible budget variance for 2019 [a positive number means a favorable variance and a negative number means an unfavorable variance]?

A: $-24,672 B: $-22,201 C: $6,422

D: $8,028 E: $9,634 F: $10,499

Answer 1

1) Static budget is the master budget in which the amount does not change even when he volume of units changes.

Static budget = $119,900+$212,800

=$332,700

Answer B

2) Total overhead flexible budget variance = flexible Overhead-actual overhead8,02

flexible overhead uses the budgeted costs that would occur for actual units produced

=($10.90*14,000)+$212,800

=$365,400

Actual overhad = $142,101+$215,271

=$357,372

Flexible budget variance=$365,400-$357,372

=$8,028

Answer D

As the actual overhead is lesser than flexible budget overhead the variance is positive.