Question

X Company's 2019 budgeted overhead cost function was C=$10.10X + $192,400, where X is the number of units produced. The following information is also available for 2019:

	Master	Actual
	Budget	Results
Production	10,500 units	13,800 units
Total variable costs	$106,050	$196,118
Total fixed costs	$192,400	$196,309

1. What was the total overhead static budget for 2019?

A: $139,380

B: $298,450

C: $302,359

D: $331,780

E: $335,689

F: $392,427

Tries 0/99

2. What was the total overhead flexible budget variance for 2019 [a positive number means a favorable variance and a negative number means an unfavorable variance]?

A: $-93,977

B: $-90,068

C: $-72,776

D: $-60,647

E: $-56,738

F: $-48,518

Answer 1

The Flexible budget is the budget that adjust or changes with changes in volume or activity as per standard rate per unit . The static or Fixed Budget amounts do not change even with the significant change in volume . Static Budget are prepare on the basis of some estimate or forecast& then this estimates are adjusted with actual production quantity which is know as flexible budget.

1) Correct ans. is Option B $298450

Calculation of Total Overhead under Static Budget

Static budget + Master budget = (Total Variable Cost + Total Fixed Cost )

= $106050+$192400

=$298450

2)Correct ans. is Option D -$60647

a)Cost Function of Flexible budget is C=$10.10X + $ 192400 , X is number of unit produce= Actual unit =13800

=$10.10(13800) +$192400

=$331780

b)Total Flexible overhead Variance is the difference of total Flexible budgeted overhead and the actual overhead

=$331780- $(196118+196309)

=$331780-$392427

=($60647 ) ie Unfavourable