Answer the following questions using the information below:
Fearless Frank's Fertiliser Farm produces fertiliser and distributes the product by using his tanker trucks.Frank's uses budgeted fleet hours to allocate variable manufacturing overhead.The following information pertains to the company's manufacturing overhead data:
$\begin{array}{lr}
\text { Budgeted output urits } & 450 \text { truckloads } \
\text { Budgeted fleet hours } & 350 \text { hours } \
\text { Budgeted kilos of fertiliser } & 12000000 \text { kilos } \
\text { Budgeted variable manufacturing overhead costs for } 450 \text { loads } & \$ 50000\
\
\text { Actual output units produced and delivered } & 470 \text { truckloads } \
\text { Actual fleet hours } & 327 \text { hours } \
\text { Actual kilos of fertiliser produced and delivered } & 12600000 \text { kilos } \
\text { Actual variable manufacturing overhead costs } & \$ 52250
\end{array}$
-What is the flexible-budget variance for variable manufacturing overhead?
A)$27.78 favourable
B)$27.78 unfavourable
C)zero
D)None of these answers are correct.

Question

Answer the following questions using the information below:
Fearless Frank's Fertiliser Farm produces fertiliser and distributes the product by using his tanker trucks.Frank's uses budgeted fleet hours to allocate variable manufacturing overhead.The following information pertains to the company's manufacturing overhead data:
 $\begin{array}{lr}
\text { Budgeted output urits } & 450 \text { truckloads } \
\text { Budgeted fleet hours } & 350 \text { hours } \
\text { Budgeted kilos of fertiliser } & 12000000 \text { kilos } \
\text { Budgeted variable manufacturing overhead costs for } 450 \text { loads } & \$ 50000\
\
\text { Actual output units produced and delivered } & 470 \text { truckloads } \
\text { Actual fleet hours } & 327 \text { hours } \
\text { Actual kilos of fertiliser produced and delivered } & 12600000 \text { kilos } \
\text { Actual variable manufacturing overhead costs } & \$ 52250
\end{array}$
-What is the flexible-budget variance for variable manufacturing overhead?
A)$27.78 favourable
B)$27.78 unfavourable
C)zero
D)None of these answers are correct.

Quizplus · Accepted Answer

The flexible-budget variance for variable manufacturing overhead is calculated as the difference between the actual variable manufacturing overhead costs and the flexible-budget variable manufacturing overhead costs. The flexible-budget variable manufacturing overhead costs are calculated by multiplying the actual fleet hours by the variable manufacturing overhead rate per fleet hour. The variable manufacturing overhead rate per fleet hour is calculated by dividing the budgeted variable manufacturing overhead costs by the budgeted fleet hours.In this case, the actual variable manufacturing overhead costs are $52,250, the actual fleet hours are 327 hours, the budgeted variable manufacturing overhead costs are $50,000, and the budgeted fleet hours are 350 hours. Therefore, the flexible-budget variance for variable manufacturing overhead is calculated as follows:Flexible-budget variance for variable manufacturing overhead = Actual variable manufacturing overhead costs - Flexible-budget variable manufacturing overhead costsFlexible-budget variance for variable manufacturing overhead = $52,250 - ($50,000 x 327 hours / 350 hours)Flexible-budget variance for variable manufacturing overhead = $52,250 - $47,228.57Flexible-budget variance for variable manufacturing overhead = $27.78 favourable

Answer the Following Questions Using the Information Below: Fearless Frank's

Answer the Following Questions Using the Information Below:
Fearless Frank's