Alaska Company expressed the total expenses (Y) component of its master budget for February with the cost formula Y = $100,000 + $40*X, where X represents the expected number of units of its only product to be manufactured and sold. The budgeted average selling price per unit was $65 for budgeted sales volume 5,000 units. Reported actual results for February were as follows:

-What was the flexible budget variance for February?

Question

Alaska Company expressed the total expenses (Y) component of its master budget for February with the cost formula Y = $100,000 + $40*X, where X represents the expected number of units of its only product to be manufactured and sold. The budgeted average selling price per unit was $65 for budgeted sales volume 5,000 units. Reported actual results for February were as follows:

-What was the flexible budget variance for February?

Quizplus · Accepted Answer

Flexible budget variance = Actual results - Flexible budget
Flexible budget = $100,000 + $40 * 4,200 (actual units produced)

Flexible budget = $100,000 + $168,000 = $268,000
Actual results = $298,000

Flexible budget variance = $298,000 - $268,000 = $30,000 U
Therefore, the correct option is C - $7,400 U.

Alaska Company Expressed the Total Expenses (Y) Component of Its