Majestic Corporation manufactures wheel barrows and uses budgeted machine hours to allocate variable manufacturing overhead. The following information relates to the company's manufacturing overhead data:

What is the flexible-budget variance for variable manufacturing overhead?

Question

Majestic Corporation manufactures wheel barrows and uses budgeted machine hours to allocate variable manufacturing overhead. The following information relates to the company's manufacturing overhead data:

What is the flexible-budget variance for variable manufacturing overhead?

Quizplus · Accepted Answer

Budgeted machine hours per unit = 17,400 ÷ 43,500 = 0.4
Budgeted machine hours allowed for 45,500 units = 45,500 × 0.4 = 18,200
Budgeted variable overhead rate per machine hour = $382,800 ÷ 17,400 = $22.00
Flexible-budget amount = 18,200 × $22.00 = $400,400
Flexible-budget variance = $435,709 - $400,400 = $35,309 unfavorable

Majestic Corporation Manufactures Wheel Barrows and Uses Budgeted Machine Hours