Brown Dental Equipment uses a flexible budget for its indirect manufacturing costs. For 20X2 the company anticipated that it would produce 36,000 components with 7,000 machine hours and 14,400 employee days. The costs and cost drivers were to be as follows:

Fixed Variable Cost driver

Product handling $30,000 $0.20 per unit

Inspection 8,000 4 per 100 unit batch

Utilities 400 2 per 100 unit batch

Maintenance 1,000 0.1 per machine hour

Supplies 2.5 per employee day

During the year the company processed 40,000 units, worked 15,000 employee days, and had 8,000 machine hours. The actual costs for 20X2 were:

Actual costs

Product handling $38,400

Inspection 10,000

Utilities 1,420

Maintenance 1,400

Supplies 36,800

Required:

a. What is the total static budget overhead variane for 20X2?

A.

$3,590 favourable

B.

$7,560 favourable

C.

$2,560 unfavourable

D.

$3,780 unfavourable

b. What is the total flexible budget overhead variance for 20X2?

A.

$190 unfavourable

B.

$280 unfavourable

C.

$180 favourable

D.

$80 favourable