Answer the following questions using the information below:
Alice Springs Corporation manufactures industrial-sized water coolers and uses budgeted machine-hours to allocate variable manufacturing overhead.The following information pertains to the company's manufacturing overhead data:
$$\begin{array} { l r }
\text { Budgeted output units } & 20000 \text { units } \
\text { Budgeted machine-hours } & 6000 \text { hours } \
\text { Budgeted variable manufacturing overhead costs for } 20000 \text { units } & \$ 161250 \
& \
\text { Actual output units produced } & 24000 \text { units } \
\text { Actual machine-hours used } & 7200 \text { hours } \
\text { Actual variable manufacturing overhead costs } & \$ 242000
\end{array}$$
-What is the flexible-budget variance for variable manufacturing overhead?
A)$5500 favourable
B)$5500 unfavourable
C)$4300 favourable
D)None of these answers are correct.

Question

Answer the following questions using the information below:
Alice Springs Corporation manufactures industrial-sized water coolers and uses budgeted machine-hours to allocate variable manufacturing overhead.The following information pertains to the company's manufacturing overhead data:
 $$\begin{array} { l r } 
\text { Budgeted output units } & 20000 \text { units } \
\text { Budgeted machine-hours } & 6000 \text { hours } \
\text { Budgeted variable manufacturing overhead costs for } 20000 \text { units } & \$ 161250 \
& \
\text { Actual output units produced } & 24000 \text { units } \
\text { Actual machine-hours used } & 7200 \text { hours } \
\text { Actual variable manufacturing overhead costs } & \$ 242000
\end{array}$$
-What is the flexible-budget variance for variable manufacturing overhead?
A)$5500 favourable
B)$5500 unfavourable
C)$4300 favourable
D)None of these answers are correct.

Quizplus · Accepted Answer

Flexible budget variance = Actual variable overhead cost - (Flexible budget variable overhead rate x Actual machine-hours)

Actual variable overhead cost = $72,500
Flexible budget variable overhead rate = $5 per machine-hour
Actual machine-hours = 14,000

Flexible budget variance = $72,500 - ($5 x 14,000)
Flexible budget variance = $72,500 - $70,000
Flexible budget variance = $2,500 unfavorable

Therefore, the answer is B) $5500 unfavorable.

Answer the Following Questions Using the Information Below: Alice Springs

Answer the Following Questions Using the Information Below:
Alice Springs