If an actual incurred cost is $387500 and the flexible budget amount is $168750, then fixed overhead variance of flexible budget would be ____________?
Correct answer: C. $218,750
- A. $518,750
- B. $418,750
- C. $218,750
- D. $318,750
Explanation
The flexible-budget variance is the difference between actual incurred cost and the flexible-budget amount: $387,500 − $168,750 = $218,750. The variance is unfavorable because actual cost exceeds the budgeted amount.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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