The following information was compiled by Fabulous Incorporated:
$\begin{array} { l }
\text {Expected volume of production }&50,000 \text { units }\
\text {Actual volume of production }&47,500 \text { units }\
\text { Budgeted fixed overhead costs (for 50,000 budgeted units)}&\$400,000 \
\text {Actual fixed overhead costs }&\$415,000 \
\text { Actual variable overhead costs}&\$790,000 \
\text { Budgeted variable overhead costs (for 50,000 bud geted units)}&\$ 855,000\
\end{array}$

Assume the cost-allocation base for overhead costs is units of production.What is the fixed overhead flexible budget variance?
A) $15,000 Favorable
B) $15,000 Unfavorable
C) $20,000 Favorable
D) $20,000 Unfavorable

Question

The following information was compiled by Fabulous Incorporated:
$\begin{array} { l  }
 \text {Expected volume of production }&50,000 \text { units }\
 \text {Actual volume of production }&47,500 \text { units }\
 \text { Budgeted fixed overhead costs (for 50,000 budgeted units)}&\$400,000 \
 \text {Actual fixed overhead costs }&\$415,000 \
 \text { Actual variable overhead costs}&\$790,000 \
 \text { Budgeted variable overhead costs (for 50,000 bud geted units)}&\$ 855,000\
\end{array}$

Assume the cost-allocation base for overhead costs is units of production.What is the fixed overhead flexible budget variance?
A) $15,000 Favorable
B) $15,000 Unfavorable
C) $20,000 Favorable
D) $20,000 Unfavorable

Quizplus · Accepted Answer

The fixed overhead flexible budget variance is calculated as the difference between the actual fixed overhead costs and the budgeted fixed overhead costs. Here, the actual fixed overhead costs are $415,000 and the budgeted fixed overhead costs are $400,000, leading to a variance of $15,000 ($415,000 - $400,000) which is unfavorable because the actual costs exceeded the budgeted costs.

The Following Information Was Compiled by Fabulous Incorporated Assume the Cost-Allocation Base for Overhead Costs Is Units of l