The Landrum Company provides the following standard cost data per unit of product: Variable overhead: $8.00Landrum anticipated that they would produce and sell 24,000 units. During the period, the company produced and sold 25,000 units incurring $210,000 of variable overhead costs.
The variable overhead flexible budget variance was:
A) $8,000 unfavorable.
B) $10,000 unfavorable.
C) $8,000 favorable.
D) $10,000 favorable.

Question

Quizplus · Accepted Answer

The flexible budget formula for variable overhead is:

Flexible budget variable overhead = Actual units produced and sold * Standard variable overhead rate

Flexible budget variable overhead = 25,000 units * $8.00 per unit

Flexible budget variable overhead = $200,000

The flexible budget variance for variable overhead is calculated as:

Flexible budget variance = Actual variable overhead - Flexible budget variable overhead

Flexible budget variance = $210,000 - $200,000

Flexible budget variance = $10,000 unfavorable

Therefore, the correct answer is B, $10,000 unfavorable.

The Landrum Company Provides the Following Standard Cost Data Per