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23 August, 01:28

FastNet Systems is a start-up company that makes connectors for high-speed Internet connections. The company has budgeted variable costs of $ 110 for each connector and fixed costs of $ 4 comma 500 per month. FastNet 's static budget predicted production and sales of 100 connectors in August, but the company actually produced and sold only 74 connectors at a total cost of $ 25 comma 000. FastNet 's flexible budget variance for total costs is

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  1. 23 August, 02:51
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    Cost variance = $12,360 unfavorable

    Explanation:

    Giving the following information:

    Standard costs:

    Budgeted variable costs of $ 110 for each connector

    Fixed costs of $4,500 per month.

    Actual production = 74 connectors

    Total cost = $25,000

    First, we need to calculate the standard total cost:

    Standard total cost = 4,500 + 110*74 = $12,640

    Now, we can determine the flexible budget cost variance:

    Cost variance = 12,640 - 25,000 = $12,360 unfavorable
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