Bridgestone Company has developed the following flexible budget formulas for its four overhead items:
Bridgestone normally produces 10,000 units (each unit requires 0.10 direct labour hours); however, this year 15,000 units were produced with the following actual costs:
$\begin{array}{ll}\text { Overhead item }&\text { Actual costs }\
\text { Maintenance } & \$ 14,000 \
\text { Power } & \$ 3,600 \
\text { Direct labour } & \$ 16,000 \
\text { Equipment lease } & \$ 5,000
\end{array}$
-Refer to the Figure.When using an after-the-fact flexible budget,what is the total budget variance?
A)$3,600 U
B)$3,600 F
C)$5,000 U
D)$5,000 F

Question

Bridgestone Company has developed the following flexible budget formulas for its four overhead items:
Bridgestone normally produces 10,000 units (each unit requires 0.10 direct labour hours); however, this year 15,000 units were produced with the following actual costs:
  $\begin{array}{ll}\text { Overhead item }&\text { Actual costs }\
\text { Maintenance } & \$ 14,000 \
\text { Power } & \$ 3,600 \
\text { Direct labour } & \$ 16,000 \
\text { Equipment lease } & \$ 5,000
\end{array}$
-Refer to the Figure.When using an after-the-fact flexible budget,what is the total budget variance?
A)$3,600 U 
B)$3,600 F 
C)$5,000 U 
D)$5,000 F

Quizplus · Accepted Answer

The total budget variance is calculated by comparing the actual results to the flexible budget. A variance is unfavorable (U) when actual expenses are higher than the budgeted amounts or when actual revenues are lower than expected. In this case, without the specific figure provided, the correct approach involves understanding that an unfavorable variance (U) indicates that the actual performance was worse than the budgeted (or expected) performance. Since the question mentions an "after-the-fact flexible budget" and asks for the "total budget variance," without the details of the figure, we deduce that the correct answer involves recognizing an unfavorable variance scenario. Given the options, the choice that indicates an unfavorable variance is the correct context to apply.

Bridgestone Company Has Developed the Following Flexible Budget Formulas for Its