Neptune Inc.uses a standard cost system and has the following information for April:
The total factory overhead flexible-budget variance is:
A)$940 unfavorable.
B)$1,040 favorable.
C)$1,980 favorable.
D)$2,160 favorable.

Question

Neptune Inc.uses a standard cost system and has the following information for April: 
The total factory overhead flexible-budget variance is:
A)$940 unfavorable. 
B)$1,040 favorable. 
C)$1,980 favorable. 
D)$2,160 favorable.

Quizplus · Accepted Answer

To calculate the factory overhead flexible-budget variance, we need to compare the actual overhead costs with the flexible-budgeted overhead costs based on actual production.

Actual overhead costs = $44,000 
Flexible-budgeted overhead costs = $42,060 (1,950 hours x $21.60 per hour) 
Variance = Actual overhead costs - Flexible-budgeted overhead costs 
= $44,000 - $42,060 
= $1,940 unfavorable

Therefore, the correct answer is A, $940 unfavorable.