For 2012, X Company estimated production of 3,300 units of finished product and

ID: 2374552 • Letter: F

Question

For 2012, X Company estimated production of 3,300 units of finished product and direct material cost of $22,968. Actual production in 2012 was 2,600 units of finished product, and actual direct material cost was $13,230. What was the direct materials flexible budget variance in 2012 (assume that a positive number means a favorable variance and a negative means an unfavorable variance)?

My Work:

Flexible - Actual

(2600*6.96)-(2600*5.08)=4868

I put it as negative because they actually spent less than budgeted. It says my answer is wrong, where in my process did I go wrong?

Explanation / Answer

Direct Material Flexible Budget variance = 22968/3300*2600 - 13230 = $4866

it will be positive as it is favorable varince

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For 2012, X Company estimated production of 3,300 units of finished product and

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