A $5000 unfavourable flexible-budget variance indicates that:
A)the standard variable manufacturing overhead exceeded the flexible-budget amount by $5000.
B)the actual variable manufacturing overhead exceeded the flexible-budget amount by $5000.
C)the flexible-budget amount exceeded actual variable manufacturing overhead by $5000.
D)the flexible-budget amount exceeded standard variable manufacturing overhead by $5000.

Question

Quizplus · Accepted Answer

An unfavourable flexible-budget variance occurs when the actual variable manufacturing overhead exceeds the flexible-budget amount. Therefore, option B is the correct answer. Option A is incorrect because it suggests that the standard variable manufacturing overhead exceeded the flexible-budget amount, which is not relevant to a flexible budget variance. Option C is incorrect because it suggests that the flexible budget amount exceeded the actual variable overhead, which is not possible. Option D is incorrect because it suggests that the flexible budget amount exceeded the standard variable overhead, which may or may not be true, but it is not relevant to the given variance.

A $5000 Unfavourable Flexible-Budget Variance Indicates That