Ben Company planned to produce 12,000 units.This level of production required 20 setups at a cost of $18,000 plus $500 per setup.Actual production was 10,000 units,requiring 15 setups.Actual setup cost was $26,000.What is the static budget variance for setup costs?
A)$2,000 Favorable
B)$2,000 Unfavorable
C)$2,500 Favorable
D)$2,500 Unfavorable

Question

Quizplus · Accepted Answer

Static budget variance for setup costs = (Budgeted setups * Budgeted setup cost per unit) - (Actual setups * Actual setup cost per unit)= (20 * $18,000) - (15 * $26,000)= $360,000 - $390,000= -$30,000 or $30,000 Unfavorable

Ben Company Planned to Produce 12,000 Units