J&J Materials and Construction Corporation produces fertilizer and distributes the product by using dump trucks. The company uses budgeted fleet hours to allocate variable manufacturing overhead. The following information pertains to the company's manufacturing overhead data:

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

Question

J&J Materials and Construction Corporation produces fertilizer and distributes the product by using dump trucks. The company uses budgeted fleet hours to allocate variable manufacturing overhead. The following information pertains to the company's manufacturing overhead data:

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

Quizplus · Accepted Answer

Budgeted fleet hours per unit = 476 ÷ 680 = 0.7
Budgeted fleet hours allowed for 615 truckloads = 615 × 0.7 = 430.5
Budgeted variable overhead rate per machine hour = $72,590.00 ÷ 476 = $152.50
Flexible-budget amount = 430.5 × $152.50 = $65,651.3
Flexible-budget variance = $67,790.00 - $65,651.3 = $2,139 U

J&J Materials and Construction Corporation Produces Fertilizer and Distributes the Product