Baseballic Corporation manufactures baseball uniforms and uses budgeted machine-

Question

Baseballic Corporation manufactures baseball uniforms and uses budgeted machine-hours to allocate variable
manufacturing overhead. The following information relates to the company's manufacturing overhead data:
Budgeted output units 3000 units
Budgeted machine-hours 15,000 hours
Budgeted variable manufacturing overhead costs for 3000 units $135,000
Actual output units produced 3500 units
Actual machine-hours used 14,750 hours
Actual variable manufacturing overhead costs $235,000
What is the flexible-budget variance for variable manufacturing overhead?

Explanation / Answer

Flexible budget amount Budgeted machine hours per unit 15000/3000 = 5 hours per unit Budgeted machine hours allowed for 3500 units = 3500*5 = 17,500 Budgeted variable overhead rate per MH   135000/15000= 9 Flexible budget amount = 17,500*9 157500 Flexible budget variance = 235000 - 157,500 77500 U

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