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Sunland Company uses flexible budgets
Sunland Company uses flexible budgets. At normal capacity of 26000 units, budgeted manufacturing overhead is: $78000 variable and $270000 fixed. If Stone had actual overhead costs of $348400 for 28000 units produced, what is the difference between actual and budgeted costs?
Expert Solution
Computation of the difference between actual and budgeted costs:-
Variable cost per unit = Budgeted manufacturing overhead / Normal capacity
= $78,000 / 26,000
= $3 per unit
Variable cost at 28,000 units = Variable cost per unit * 28,000
= $3 * 28,000
= $84,000
Budgeted cost at 28,000 Units = Variable cost + Fixed cost
= $84,000 + $270,000
= $354,000
Difference = Actual cost - Budgeted cost
= $348,400 - $354,000
= $5,600 (Favorable)
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