Lancelot Corporation manufactures tennis gear and uses budgeted machine-hours to
ID: 2395363 • Letter: L
Question
Lancelot Corporation manufactures tennis gear and uses budgeted machine-hours to allocate variable manufacturing overhead. The following information relates to the company's manufacturing overhead data:
Budgeted output units=3,000 units
Budgeted machine-hours=15,000 hours
Budgeted variable manufacturing overhead costs for 3,000 units=$135,000
Actual output units produced=3,350 units
Actual machine-hours used=14,650 hours
Actual variable manufacturing overhead costs=$225,000
What is the flexible-budget variance for variable manufacturing overhead?
A. $90,000 Unfavorable
B. $74,250 Unfavorable
C. $90,000 Favorable
D. $74,250 Favorable
Explanation / Answer
Answer B. $74,250 (U) Flexible Budet Amount - Variable MOH = ($135,000 / 3,000 Units) X 3,350 Units Flexible Budet Amount - Variable MOH = $150,750 Flexible Budget Variance = Flexible Budget Amount - Actual Amount Flexible Budget Variance = $150,750 - $225,000 Flexible Budget Variance = $74,250 (U)
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