Just Bags
Just Bags Produces Leather Purses -Refer to Just Bags

Just Bags
Just Bags produces leather purses. The company has developed a static budget for the first quarter, which is based on 20,000 direct labour hours. During the quarter, the actual activity was 22,000 direct labour hours. Data for the first quarter are summarized as follows: $\begin{array}{lrr}&\underline{\text { Static budget }}&\underline{\text { Actual costs }}\\&\underline{(20,000 \text { hours }) } &\underline{(22,000 \text { hours }) }\\\text { Direct materials } & \$ 80,000 & \$ 87,000 \\\text { Direct labour } & 160,000 & 174,000 \\\text { Rent } &\underline{ 48,000} &\underline{ 50,000} \\\text { Total } & \underline{\$ 288,000} & \underline{\$ 311,000}\end{array}$

-Refer to Just Bags. What is the flexible budget variance for the first quarter?

A) $1,000 U
B) $1,000 F
C) $23,000 U
D) $23,000 F