Trois Elles Corporation recently prepared a manufacturing cost budget for an out

Question

Trois Elles Corporation recently prepared a manufacturing cost budget for an output of 56,000 units, as follows:

  Direct materials $112,000   Direct labor 56,000   Variable overhead 84,000   Fixed overhead 112,000   
Actual units produced amounted to 65,000. Actual costs incurred were: direct materials, $114,000; direct labor, $66,000; variable overhead, $112,000; and fixed overhead, $109,000. If Trois Elles evaluated performance by the use of a flexible budget, a performance report would reveal a total variance of (Round intermediate calculations to 2 decimals and the final answer to the nearest dollar amount.):
Trois Elles Corporation recently prepared a manufacturing cost budget for an output of 56,000 units, as follows:

  Direct materials $112,000   Direct labor 56,000   Variable overhead 84,000   Fixed overhead 112,000   
Actual units produced amounted to 65,000. Actual costs incurred were: direct materials, $114,000; direct labor, $66,000; variable overhead, $112,000; and fixed overhead, $109,000. If Trois Elles evaluated performance by the use of a flexible budget, a performance report would reveal a total variance of (Round intermediate calculations to 2 decimals and the final answer to the nearest dollar amount.):
  Direct materials $112,000   Direct labor 56,000   Variable overhead 84,000   Fixed overhead 112,000

Explanation / Answer

Solution:

Therefore Total Variance = $3500 Favourable

Computation of total variance through Performance report by use of flexible budget Particulars Per unit cost Master Budget (56000 Units) Flexible Budget (65000 Units) Actual Costs (65000 units) Variance Variance Direct Materials $2.00 $112,000.00 $130,000.00 $114,000.00 $16,000.00 F Direct Labor $1.00 $56,000.00 $65,000.00 $66,000.00 -$1,000.00 U Variable overhead $1.50 $84,000.00 $97,500.00 $112,000.00 -$14,500.00 U Fixed Overhead $112,000.00 $112,000.00 $109,000.00 $3,000.00 F Total $364,000.00 $404,500.00 $401,000.00 $3,500.00 F

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