The following information is for Brankov Corporation:
Direct Materials (measured in pounds)
$\begin{array}{ll}
\text { Standard price per unit of input } & \$ 20 \
\text { Actual price per unit of input } & \$ 18 \
\text { Standard inputs per unit of output } & 3 \text { pounds } \
\text { Actual units of input } & 8,300 \text { pounds } \
\text { Actual units of output } & 2,770 \text { units }
\end{array}$
What is the flexible budget variance for direct materials?
A) $16,400 Favorable
B) $16,400 Unfavorable
C) $16,800 Favorable
D) $16,800 Unfavorable

Question

Quizplus · Accepted Answer

The flexible budget variance for direct materials can be calculated by comparing the flexible budget amount to the actual cost. The flexible budget amount is calculated based on the actual output and the standard costs. For direct materials, the flexible budget amount is the standard price per unit of input ($20) times the standard inputs per unit of output (3 pounds) times the actual units of output (2,770 units), which equals $166,200. The actual cost is the actual price per unit of input ($18) times the actual units of input (8,300 pounds), which equals $149,400. The variance is $166,200 (flexible budget) - $149,400 (actual) = $16,800 favorable, because the actual cost is less than the flexible budget amount.

The Following Information Is for Brankov Corporation: Direct Materials (Measured

The Following Information Is for Brankov Corporation:
Direct Materials (Measured