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Homework answers / question archive / 1 HELEEN Manufacturing Company prepares master budget
1
HELEEN Manufacturing Company prepares master budget. The Company had a static budgeted operating income of $9.6 million. Actual operating income was $6.4 million. The flexible budget operating income at the actual level of output is $7,000,000. What is the static-budget variance of operating income?
Select one:
a. $1.6 million Unfavorable
b. $1.6 million Favorable
c. $3.2 million Unfavorable
d. $3.2 million Favorable
2
When preparing flexible budget, MAYAR Corporation has the following information available for variable overhead costs. Direct labor hours are the cost driver for variable overhead costs.
Actual variable overhead costs $5,120
Standard variable overhead costs $3.00 per hour
Actual direct labor hours 2,000 hours
Standard direct labor hours per unit 3 hours
Units produced 1,000
What is the variable overhead spending variance?
Select one:
a. $1,000 Unfavorable
b. $3,880 Favorable
c. $3,880 Unfavorable
d. $880 Favorable
1
Static budgeted operating income = $9.6 million
Actual operating income = $6.4 million
flexible budget operating income at the actual level of output = $7,000,000 i.e. $7 million
Static-budget variance of operating income = Actual Operating Income - Budgeted Operating Income
= $6.4 million - $9.6 million
= $3.2 million U
Answer:- Option c i.e. $3.2 million Unfavourable
2
Answer :-
Option is d. $880 Favorable.
Variable overhead spending variance
SR = Standrad variable overhead cost =$3.00
AR= Actual variable overhead cost =$5,120
AH= Actual Hours work =2,000hours
=(SR*AH)-AR
=(3.00*2,000)-5,120
=6,000 - 5,120
=$880 favorable.
