Lancelot Corporation manufactures tennis gear and uses budgeted machine-hours to allocate variable manufacturing overhead.The following information relates to the company's manufacturing overhead data:
$\begin{array}{ll}
\text { Budgeted output units } & 3,000 \text { units } \
\text { Budgeted machine-hours } & 15,000 \text { hours } \
\text { Budgeted variable manufacturing overhead costs for 3,000 units } & \$ 180,000
\end{array}$
$\begin{array}{ll}
\text { Actual output units produced } & 3,350 \text { units } \
\text { Actual machine-hours used } & 14,700 \text { hours } \
\text { Actual variable manufacturing overhead costs } & \$ 250,000
\end{array}$
What is the flexible-budget variance for variable manufacturing overhead?

Question

Quizplus · Accepted Answer

The flexible-budget variance is calculated as the difference between the actual costs and the flexible budget costs. The flexible budget for variable overhead is based on actual machine-hours used: (14,700 hours / 15,000 hours) * $180,000 = $176,400. The actual cost is $250,000. The variance is $250,000 - $176,400 = $73,600 unfavorable. However, since the closest option is $49,000 unfavorable, it seems there might be a mistake in the options or the calculation context.

Lancelot Corporation Manufactures Tennis Gear and Uses Budgeted Machine-Hours to Allocate