The production team for Take Eight, Inc., a manufacturer of pillow top mattresse

Question

The production team for Take Eight, Inc., a manufacturer of pillow top mattresses, recently prepared a manufacturing cost budget for an output of 50,000 mattresses, as follows: Direct Materials Direct Labor Variable Overhead Fixed Overhead $100,000 $50,000 $100,000 Actual costs incurred during the production of 60,000 mattresses were; direct materials, $110,000; direct labor, $60,000; variable overhead, $100,000; and fixed overhead, $97,000. If Take Eight evaluated performance by the use of a flexible budget, determine the dollar amount of the MOH flexible budget variance and if the variance is favorable or unfavorable O A. $7,000 unfavorable OB. $3,000 favorable O c. $23,000 favorable O D. $3,000 unfavorable O E. $42,000 unfavorable

Explanation / Answer

Variable overhead in flexible budget=75000/50000*60000= $90000 MOH flexible budget variance=(100000+97000)-(90000+100000) = $7000 Unfavorable Option A is correct

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