Answer the following questions using the information below:
Tiger O'Reilly planned to use $85 of material per unit but actually used $82 of material per unit,and planned to make 1200 units but actually made 1000 units.
-The flexible-budget variance is:
A)$3000 favourable.
B)$2400 favourable.
C)$14 000 unfavourable.
D)$16 400 unfavourable.

Question

Quizplus · Accepted Answer

The flexible-budget variance is the difference between the actual cost and the flexible-budget cost. The flexible-budget cost is the cost that would have been incurred if the actual level of activity had been achieved. In this case, the actual level of activity was 1000 units, and the flexible-budget cost would have been 1000 units x $82 = $82,000. The actual cost was 1000 units x $85 = $85,000. Therefore, the flexible-budget variance is $85,000 - $82,000 = $3,000 favourable.

Answer the Following Questions Using the Information Below