The static budget variance for materials is $200 F and the budgeted cost for materials is $52,000.If the budgeted volume is 13,000 and the actual volume is 13,500,what is the flexible budget variance?
A)$1,800 F
B)$2,000 F
C)$2,200 F
D)$3,000 F

Question

Quizplus · Accepted Answer

Static budget variance = Actual Cost - Budgeted Cost

Given, static budget variance for materials = $200 F

Hence, Actual Cost - $52,000 = $200 F, which implies Actual Cost = $52,200

Flexible Budget Variance = Actual Cost - Flexible Budget Cost

Also, Flexible Budget Cost = (Budgeted cost / Budgeted volume) * Actual volume
                                      = ($52,000 / 13,000) * 13,500
                                      = $54,750

Therefore, Flexible Budget Variance = $52,200 - $54,750 = $2,550 F

Hence, the correct choice is C) $2,200 F.

The Static Budget Variance for Materials Is $200 F and the Budgeted