Wild West Company planned to produce 12,000 units. Processing required 16,000 machine hours at a cost of $15,000 + $10.50 per machine hour. Actual sales were 14,000 units requiring 20,000 machine hours. Actual processing cost was $222,000. is the master budget variance for processing.
A) $39,000 unfavorable
B) $39,000 favorable
C) $42,000 favorable
D) $42,000 unfavorable

Question

Quizplus · Accepted Answer

The master budget variance is calculated by comparing the budgeted cost for the planned production with the actual cost. The budgeted cost for 12,000 units is $15,000 + (16,000 hours * $10.50) = $183,000. The actual cost was $222,000. The variance is $222,000 - $183,000 = $39,000 unfavorable.

Wild West Company Planned to Produce 12,000 Units