12. Belrause Corporation recently prepared a manufacturing cost budget for an ou
ID: 2444719 • Letter: 1
Question
12. Belrause Corporation recently prepared a manufacturing cost budget for an output of 50,000 units, as follows: Actual units produced amounted to 60,000. Actual costs incurred were: direct materials, $110,000; direct labor, $60,000; variable overhead, $100,000; and fixed overhead, $97,000. If Belrause evaluated performance by the use of a flexible budget, a performance report would reveal a total variance of: a. $27,000 unfavorable b. $42,000 unfavorable c. $3,000 favorable d. $23,000 favorable e. $45,000 unfavorable 13. Which of the following statements best describes a static budget: a. It is based totally on prior year's costs. b. It is based on only one anticipated activity level. C. It is based on a range of activity. d. It is preferred over a flexible budget in the evaluation of performance. e. It presents an accurate and fair measure of performance when planned activity differs from actual activity. 14. When a flexible budget is used, an increase in activity level within the relevant range would: a. increase total fixed costs. b. increase total costs. c. decrease variable cost per unit. d. increase variable cost per unit.Explanation / Answer
12)
Total Variance = Actual Total Cost - Flexible Budget Total Cost
Total Variance = (110000+60000+100000+97000) - ((100000+50000+75000)/50000*60000 + 100000)
Total Variance = $ 3000 Favorable
13
It is based on only one anticipated activity level
14)
b) Increase total cost
Note : In flexible budget Total Fixed cost & variable cost per unit remain constant,
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