The following information was compiled by Frank Ironman Incorporated:
$\begin{array} { l }
\text {Expected volume of production }&50,000 \text { units }\
\text {Actual volume of production }&47,500 \text { units }\
\text { Budgeted fixed overhead costs (for 50,000 budgeted units)}&\$200,000 \
\text {Actual fixed overhead costs }&\$220,000 \
\text { Actual variable overhead costs}&\$790,000 \
\text { Budgeted variable overhead costs (for 50,000 bud geted units)}&\$ 855,000\
\end{array}$

Assume the cost allocation base for overhead costs is units of production.What is the fixed overhead flexible budget variance?
A) $6,000 Favorable
B) $12,000 Unfavorable
C) $20,000 Favorable
D) $20,000 Unfavorable

Question

The following information was compiled by Frank Ironman Incorporated:
$\begin{array} { l  }
 \text {Expected volume of production }&50,000 \text { units }\
 \text {Actual volume of production }&47,500 \text { units }\
 \text { Budgeted fixed overhead costs (for 50,000 budgeted units)}&\$200,000 \
 \text {Actual fixed overhead costs }&\$220,000 \
 \text { Actual variable overhead costs}&\$790,000 \
 \text { Budgeted variable overhead costs (for 50,000 bud geted units)}&\$ 855,000\
\end{array}$

Assume the cost allocation base for overhead costs is units of production.What is the fixed overhead flexible budget variance?
A) $6,000 Favorable
B) $12,000 Unfavorable
C) $20,000 Favorable
D) $20,000 Unfavorable

Quizplus · Accepted Answer

The fixed overhead flexible budget variance is calculated as the difference between the actual fixed overhead costs and the budgeted fixed overhead costs. Since the budgeted fixed overhead costs are $200,000 and the actual fixed overhead costs are $220,000, the variance is $220,000 - $200,000 = $20,000 Unfavorable.

The Following Information Was Compiled by Frank Ironman Incorporated Assume the Cost Allocation Base for Overhead Costs Is Units