Question

FastNet Systems is a​ start-up company that makes connectors for​ high-speed Internet connections. The company has budgeted variable costs of $ 110 for each connector and fixed costs of $ 4 comma 500 per month. FastNet​'s static budget predicted production and sales of 100 connectors in​ August, but the company actually produced and sold only 74 connectors at a total cost of $ 25 comma 000. FastNet​'s flexible budget variance for total costs is

Answer 1

Answer:

Cost variance= $12,360 unfavorable

Explanation:

Giving the following information:

Standard costs:

Budgeted variable costs of $ 110 for each connector

Fixed costs of $4,500 per month.

Actual production= 74 connectors

Total cost= $25,000

First, we need to calculate the standard total cost:

Standard total cost= 4,500 + 110*74= $12,640

Now, we can determine the flexible budget cost variance:

Cost variance= 12,640 - 25,000= $12,360 unfavorable