Question

EB17.

Answer 1

Answer:

$600 unfavorable

Explanation:

The budgeted cost of producing 14,000 units at $5.50 per unit and with fixed costs of $19,400 is:

$B = 14,000*5.50 + 19,400\\B= \ 96,400$

The variance is given by subtracting the budgeted cost by the actual cost ($97,000):

$V= \ 96,400 - \ 97,000\\V= -\ 600$

Since the variance is negative, the variance is unfavorable