Answer:
$125,000 Adverse variance as the cost actually incurred is higher.
Explanation:
The first step here is to find the Flexed Variable Overhead Cost by using the unitary method:
Budgeted overhead cost for 10,000 budgeted hrs = $2500,000
Budgeted overhead cost for 1 budgeted hrs = $2500,000 / 10000 bud. hrs
Budgeted overhead cost for 1 budgeted hrs = $250 per standard hr
And as we know that
Flexed Variable Overhead Budget = Actual Units * Budgeted overhead cost for standard hr
By simply putting values we have:
Flexed Variable Overhead Budget = 9000 hours * $250 per standard hr
= $2,2500,000
Now we will find the Flexible-budget Variable Overhead Variance by taking the difference of Variable overhead flexible budget and Actual Variable Overhead.
Flexible-budget Variable Overhead Variance = Variable overhead flexible budget - Actual Variable Overhead
By putting the values we have:
Flexible-budget Variable Overhead Variance = $2,2500,000 - $2,375,000
= $125,000 Adverse variance as the cost actually incurred is higher.
