5.55 points MC Qu. 77 The following information for the past year .. The followi

Question

5.55 points MC Qu. 77 The following information for the past year .. The following information for the past year is available from Thinnews Co, a company that uses machine hours to apply fact Actual total factory overhead cost Actual fixed overhead cost Budgeted fixed overhead cost Actual machine hours Standard machine hours for the units manufactured Denominator volume-machine hours Standard variable overhead rate per machine hour $24.000 $10,000 $11,000 5,000 4,800 5,500 $3 Under a two-variance breakdown (decomposition) of the total factory overhead variance, the total flexible-budget variance is O $400 favorable. O $600 unfavorable. O $1,400 favorable. O $1,400 unfavorable. $2,000 favorable. References

Explanation / Answer

Answer:- $2000 favourable

Explanation:-

Total overhead spending variance = Total actual overhead cost incurred - Flexible Budget for overhead based on inputs that is, actual machine hours worked

Total actual overhead cost incurred the period = $24000 (given)

Flexible Budget for variable overhead based on inputs = $3.00/machine hours × 5000 machine hours worked =$15000

Flexible Budget for fixed overhead = $11000 Lumpsum amount

Total overhead spending variance = $24000 - ($15000 + $11000)

= $24000 - $26000

= $2000 favourable

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