The flexible budget for production of copper wire by Metalworks, Inc., includes

Question

The flexible budget for production of copper wire by Metalworks, Inc., includes a budget based on 50,000 units produced per month. For this level of production, indirect materials are $206,000, indirect labor is $148,000, utilities are $18,000, depreciation is $64,000, and supervision is $5,000. In the month of January, they spent $205,472 for indirect materials, $149,594 for indirect labor, and $19,650 for utilities to make 50,000 units of wire. What was their difference in variable costs for January?

A : $1,066 favorable

B : $2,716 favorable

C : $1,066 unfavorable

D : $2,716 unfavorable

Explanation / Answer

Answer D

=372000-374716

=-2716

Particulars Budget Actual Indirect Material 206000 205472 Indirect Labour 148000 149594 Utilities 18000 19650 Total 372000 374716

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