Question

At the start of 2018, X Company developed the following budgeted total cost function: $11.64X + $219,000, where X is number of units produced. Budgeted production for the year was 10,200 units. Actual total costs and actual production in 2018 were different than the budgeted amounts. The actual total cost function turned out to be $12.28X + $198,014, and actual production was 9,300 units.

What was the 2018 flexible budget variance for total fixed cost [a positive number means a favorable variance and a negative number means an unfavorable variance]?

What was the 2018 flexible budget variance for total variable costs [a positive number means a favorable variance and a negative number means an unfavorable variance]

Answer 1

1
Fixed costs in flexible budget	219000
Less: Actual fixed costs	198014
Flexible budget variance for Total fixed cost	20986
2
Variable costs in flexible budget	108252	=9300*11.64
Less: Actual variable costs	114204	=9300*12.28
Flexible budget variance for Total variable costs	-5952