Eberley Corporation's cost formula for its manufacturing overhead is $25, 700 per month plus $10 per machine-hour.For the month of July, the company planned for activity of 5, 900 machine-hours, but the actual level of activity was 5, 920 machine-hours.The actual manufacturing overhead for the month was $86, 800. The activity variance for manufacturing overhead in July would be closest to:

Question

Quizplus · Accepted Answer

The activity variance is calculated as the difference between the flexible budget overhead and the planned budget overhead. The flexible budget overhead is $25,700 + ($10 * 5,920) = $85,900. The planned budget overhead is $25,700 + ($10 * 5,900) = $85,700. The activity variance is $85,900 - $85,700 = $200 U (Unfavorable).

Eberley Corporation's Cost Formula for Its Manufacturing Overhead Is $25