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at normal capacity of 6000 units, budget manufacturing overhead is $18,000 vatiable and $270,000 fixed. if...

at normal capacity of 6000 units, budget manufacturing overhead is $18,000 vatiable and $270,000 fixed. if crane company had actual overheaf costs of $292,400 for 8,000 units produced ehat is the difference between actual and budget costs? 1. 6400 favorable 2. 1600 favorable 3. 1600 unfavorable 4. 4800 unfavorable
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Answer #1

Normal capacity= 6000 units

Budgeted manufacturing overhead

Variable= $18,000 or 3 per unit

Fixed=$270,000

crane company expected to pay $288,000 for 6000 units.

In actual crane company produced 8000 units

Budgeted /expected cost is for 8000 units = Fixed cost + variable cost

= $270,000+ $(8000*3)

= $294,000

Given in question actual overhead cost =$292,400

Thus Difference between actual and budget cost is favorable

As with an expected cost of $294,000 for 8000 units produced , but actual cost incurred ( as given ) is $292,400

Difference= Expected cost- Actual cost

=$294,000 - $292,400

= 1600 favorable

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