<u>Solution and Explanation:</u>
The following table has been made in order to find out the total variance cost that has been incurred and the total cost
<u>Particulars</u> <u>Cost formula based</u> <u>Flexible budget </u> <u>Actual</u> <u>Variance</u>
<u> on 50000 units</u> <u>on the basis of </u>
<u>60000 unit</u>
Direct materials $2 120000 $110000 10000 F
The direct labour $1 60000 60000 0
Variable overhead $1.5 90000 100000 10000 U
Fixed overhead $100000 100000 97000 3000 F
The total cost 370000 367000 3000 F
Where F stands for – favourable and U stands for unfavourable
The total variance cost after the above calculations is = $3000 F