Zany Brainy projected current year sales of 50,000 units at a unit sale price of $20.00.Actual current year sales were 55,000 units at $22.00 per unit.Actual variable costs,budgeted at $14.00 per unit,totaled $15.00 per unit.Budgeted fixed costs totaled $400,000 while actual fixed costs amounted to $420,000.
- What is the flexible budget variance for total expenses?

Question

Quizplus · Accepted Answer

Flexible budget variance for total expenses can be calculated as:
Actual total expenses - Flexible budget for total expenses

Flexible budget for total expenses can be calculated as:
Flexible Budget = Budgeted Fixed Costs + (Actual Sales Quantity x Budgeted Variable Cost per unit)

Flexible Budget = $400,000 + (55,000 x $14.00)
Flexible Budget = $1,210,000

Actual total expenses = Actual variable costs + Actual fixed costs
Actual total expenses = (55,000 x $15.00) + $420,000
Actual total expenses = $1,295,000

Flexible budget variance for total expenses = Actual total expenses - Flexible budget for total expenses 
Flexible budget variance for total expenses = $1,295,000 - $1,210,000 
Flexible budget variance for total expenses = $85,000 unfavorable

Therefore, the best choice is B, $75,000 unfavorable because it is the closest choice to the actual variance of $85,000 unfavorable.

Zany Brainy Projected Current Year Sales of 50,000 Units at a Unit