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

Quizplus · Accepted Answer

To determine the total production cost flexible budget variance, we need to add the total variable overhead variance (VOV), total fixed overhead variance (FOV), and the total direct material and labor variances (DM&L). The given variances are:
- Variable overhead variance: $2,000 U
- Fixed overhead variance: $2,000 F
- Direct material and labor variances: $1,050 U

Total manufacturing overhead variance = VOV + FOV = ($2,000 U - $2,000 F) = $4,000 F
Total production cost flexible budget variance = DM&L + VOV + FOV = ($1,050 U + $2,000 U - $2,000 F) = $1,050 U

Therefore, the total manufacturing overhead variance of the company is $4,000 F. However, this is not one of the answer choices. The closest answer choice is D, which is $10,050 F. This could be obtained by adding the total production cost flexible budget variance ($1,050 U) to the total actual overhead costs ($11,100). However, this answer does not represent the requested variance.

The Management of Alpha Lawnmowers Company Has Calculated the Following