Question

Fox company’s static budget shows $40,500 budgeted for direct materials, $54,000 budgeted for direct labor, and $13,500 budgeted for overhead. Fox’s actual direct materials were $42,000, actual direct labor was $51,000, and actual overhead was $13,800. What is the total difference between the static budget and actual, and is the difference favorable or unfavorable?A : $4,800, unfavorableB : $1,200, unfavorableC : $4,800, favorableD : $1,200, favorable

Answer 1

Answer:

correct option is D : $1,200, favorable

Explanation:

given data

direct materials = $40,500

direct labor = $54,000

overhead = $13,500

actual direct materials = $42,000

actual direct labor = $51,000

actual overhead = $13,800

to find out

total difference between the static budget and actual and  difference favorable or unfavorable

solution

we know that If the actual is less than budget that is favorable condition

and If the actual are more than the budgets, it is called as unfavorable condition

so here

                               Budgets    Actual        Condition

Direct Materials      40500      42000        1500           unfavorable

Direct Labors          54000      51000         3000          favorable

Overheads              13500       13800          300            unfavorable

so that  Total Difference and Condition  =   1200          favorable

so correct option is D : $1,200, favorable