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If the actual cost of production is $120,000 and the budgeted cost is $100,000,
If the actual cost of production is $120,000 and the budgeted cost is $100,000, what is the cost variance?
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Practice Questions
1 question
Q1
If the actual cost of production is $120,000 and the budgeted cost is $100,000, what is the cost variance?
$20,000 Favorable
$20,000 Unfavorable
$10,000 Favorable
$10,000 Unfavorable
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Cost Variance = Actual Cost - Budgeted Cost = $120,000 - $100,000 = $20,000 Unfavorable.
Questions & Step-by-step Solutions
1 item
Q
Q: If the actual cost of production is $120,000 and the budgeted cost is $100,000, what is the cost variance?
Solution:
Cost Variance = Actual Cost - Budgeted Cost = $120,000 - $100,000 = $20,000 Unfavorable.
Steps: 6
Show Steps
Step 1: Identify the actual cost of production, which is $120,000.
Step 2: Identify the budgeted cost of production, which is $100,000.
Step 3: Use the formula for cost variance: Cost Variance = Actual Cost - Budgeted Cost.
Step 4: Substitute the values into the formula: Cost Variance = $120,000 - $100,000.
Step 5: Calculate the result: $120,000 - $100,000 = $20,000.
Step 6: Determine if the variance is favorable or unfavorable. Since the actual cost is higher than the budgeted cost, it is unfavorable.
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