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jeka94
3 years ago
12

The normal capacity of Noel Company is 4,000 units per month. At this volume, budgeted fixed and variable factory overhead are $

16,000 and $20,000, respectively. In May, actual production was 4,200 units and actual overhead incurred was $37,900.What is the variance between budgeted factory overhead per the flexible budget and actual overhead incurred?a. $1,000 U b. $900 U c. $100 U d. $1,900 U
Business
1 answer:
drek231 [11]3 years ago
5 0

Answer:

option (b) $900 U

Explanation:

Data provided in the question:

Normal capacity = 4,000 units per month

Budgeted fixed overhead = $16,000

Budgeted Variable factory overhead = $20,000

Actual overhead incurred = $37,900

Now,

Budgeted variable factory overhead cost per unit = $20,000 ÷ 4,000

= $5

Flexible budget variable factory overhead = 4,200 × $5

= $21,000

Total Variable budgeted factory overhead = $21,000 + $16,000

= $37,000

Variance = Budgeted overhead - Actual overhead

= $37,000 - $37,900

= - $900

or

$900 Unfavourable

Hence, option (b) $900 U

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