AquaCool produces and sells premium bottled water sourced from natural springs.

The budget for 2024 was to sell 50,000 bottles. Each bottle is budgeted to use $0.10 of variable overhead costs.

At the end of 2024, Vicky has sold 50,810 bottles and has actual variable overhead costs of $6,000.

Calculate the flexible budget variance for variable overhead.

Round your answer to the nearest dollar (no decimal places).

Question

AquaCool produces and sells premium bottled water sourced from natural springs.

The budget for 2024 was to sell 50,000 bottles. Each bottle is budgeted to use $0.10 of variable overhead costs.

At the end of 2024, Vicky has sold 50,810 bottles and has actual variable overhead costs of $6,000.

Calculate the flexible budget variance for variable overhead.

Round your answer to the nearest dollar (no decimal places).

BlackTom AI · Accepted Answer

First, identify the key figures from the scenario: actual bottles sold = 50,810, variable overhead cost per bottle in the flexible budget = $0.10, and actual variable overhead costs = $6,000.
Next, calculate the flexible budget for variable overhead based on actual activity: 50,810 bottles × $0.10 per bottle = $5,081.
Then, determine the flexible budget variance for variable overhead as: Actual costs − Flexible budget costs = $6,000 − $5,081 = $919.
Since the actual overhead exceeds the flexible budget, the variance is unfavorable (costs were higher than planned for the actual activity level).
Note: There are no answer choices provided in the prompt, so the calculation above reflects the standard formula for flexible budget variance in variable overhead, applied to the given data.

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