Figure 1
Torino, SA., manufactures machine parts. Torino has developed a static budget for its plant at an activity level of 10,000 direct labour hours for the month of March. The actual level of activity was 11,000 hours. The following table summarizes the static budget and the actual costs for March:
-Refer to Figure 1. What is the flexible budget variance for March?
A) £-0-
B) £1,200 F
C) £900 U
D) £1,100 F

Question

Quizplus · Accepted Answer

A flexible budget variance is the difference between the actual costs and the flexible budget costs. The flexible budget adjusts the static budget to the actual level of activity, allowing for a more accurate comparison. Since the question does not provide specific numbers to calculate the flexible budget or its variance, but the correct answer is indicated as a favorable variance of £1,200, it suggests that the actual costs were £1,200 less than what would have been expected for the 11,000 hours of activity, according to the flexible budget.

Figure 1 Torino, SA., Manufactures Machine Parts. Torino Has Developed a Static