Question

Synergy Inc. produces plastic grocery bags. Synergy has developed a static budget for the month of July based on 10,000 direct labor hours. During the quarter, the actual activity was 12,000 direct labor hours. Data for July are summarized as follows: Static budget (10,000 hours) Actual costs (12,000 hours) Direct materials cost $ 86,000 $108,000 Power 30,000 37,000 Salary of plant supervisor 7,000 7,000 Total $123,000 $152,000 What is the flexible budget variance for July

Answer 1

$146,200

Step-by-step explanation:

The computation of flexible budget variance for July is given below:-

Direct materials cost = $86,000 ÷ 10,000 × 12,000

= $103,200

Power = $30,000 ÷ 10,000 × 12,000

= $36,000

Salary of plant manager = $7,000

Flexible budget variance for July = Direct materials cost + Power + Salary of plant manager

= $103,200 + $36,000 + $7,000

= $146,200