A company has a budgeted variable cost of $3 per unit for 10,000 units. If the a

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Question: A company has a budgeted variable cost of $3 per unit for 10,000 units. If the actual variable cost is $4 per unit for 12,000 units, what is the total variable cost variance?

Options:

$12,000 Favorable
$12,000 Unfavorable
$24,000 Favorable
$24,000 Unfavorable

Correct Answer: $24,000 Unfavorable

Solution:

Total Variable Cost Variance = (Actual Cost - Budgeted Cost) = ($4 * 12,000) - ($3 * 10,000) = $48,000 - $30,000 = $18,000 (Unfavorable)

A company has a budgeted variable cost of $3 per unit for 10,000 units. If the a

Practice Questions

A company has a budgeted variable cost of $3 per unit for 10,000 units. If the actual variable cost is $4 per unit for 12,000 units, what is the total variable cost variance?

$12,000 Favorable
$12,000 Unfavorable
$24,000 Favorable
$24,000 Unfavorable

Questions & Step-by-Step Solutions

A company has a budgeted variable cost of $3 per unit for 10,000 units. If the actual variable cost is $4 per unit for 12,000 units, what is the total variable cost variance?

Step 1: Identify the budgeted variable cost per unit, which is $3.
Step 2: Identify the budgeted number of units, which is 10,000.
Step 3: Calculate the budgeted total variable cost by multiplying the budgeted cost per unit by the budgeted number of units: $3 * 10,000 = $30,000.
Step 4: Identify the actual variable cost per unit, which is $4.
Step 5: Identify the actual number of units produced, which is 12,000.
Step 6: Calculate the actual total variable cost by multiplying the actual cost per unit by the actual number of units: $4 * 12,000 = $48,000.
Step 7: Calculate the total variable cost variance by subtracting the budgeted total variable cost from the actual total variable cost: $48,000 - $30,000 = $18,000.
Step 8: Determine if the variance is favorable or unfavorable. Since the actual cost is higher than the budgeted cost, the variance is unfavorable.

Variable Costing – Understanding how to calculate total variable costs based on actual and budgeted figures.
Variance Analysis – Analyzing the difference between actual costs and budgeted costs to determine performance.

A company has a budgeted variable cost of $3 per unit for 10,000 units. If the a

What’s inside this PDF?

A company has a budgeted variable cost of $3 per unit for 10,000 units. If the a

Practice Questions

Questions & Step-by-Step Solutions

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