The management of Alpha Lawnmowers Company has calculated the following variances:
-When determining the total production cost flexible budget variance,what is the total fixed overhead variance of the company?

Question

The management of Alpha Lawnmowers Company has calculated the following variances:  
-When determining the total production cost flexible budget variance,what is the total fixed overhead variance of the company?

Quizplus · Accepted Answer

Total Production Cost Flexible Budget Variance = Actual production cost - Total flexible budget production cost

From the given information, Total Production Cost Flexible Budget Variance = $13,000 – $14,200 = $1,200 U (unfavorable)

Total Flexible Budget Production Cost = Actual Fixed Overhead + Flexible Overhead Budget

$14,200 = Actual Fixed Overhead + $20,000

Actual Fixed Overhead = $14,200 - $20,000 = $5,800

Flexible Overhead Budget Variance = Actual Fixed Overhead - Flexible Overhead Budget

Flexible Overhead Budget Variance = $5,800 - $8,850 = $3,050 F (favorable)

Therefore, the total fixed overhead variance is $3,050 F. The correct answer is B.

The Management of Alpha Lawnmowers Company Has Calculated the Following