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Prevlars budget for variable overhead and fixed overhead revealed the following information for an anticipated 41,600 hours of activity: variable overhead, $428,480; fixed overhead, $640,000.
Prevlars budget for variable overhead and fixed overhead revealed the following information for an anticipated 41,600 hours of activity: variable overhead, $428,480; fixed overhead, $640,000. The company actually worked 44,600 hours and actual overhead incurred was: variable, $442,500; fixed, $640,000.
Required:
- Compute the company's total cost variance for variable overhead and fixed overhead if the firm uses a static budget to help assess performance.
- Compute the company's total cost variance for variable overhead and fixed overhead if the firm uses a static budget to help assess performance. Assuming the use of a flexible budget.
- Which of the two budgets (static or flexible) is preferred for performance evaluations?
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