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. Which of the following describes the flexible budget variance for March?
A) The fixed overhead variance is £100 F.
B) The variable overhead variance is £1,000 U.
C) The variable overhead variance is £1,100 F.
D) both a and c

Question

Quizplus · Accepted Answer

The flexible budget variance compares the flexible budget to the actual costs. A favorable fixed overhead variance and a favorable variable overhead variance indicate that the actual costs were lower than the flexible budget for both fixed and variable overheads, hence both A and C are correct.

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