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25 February, 01:56

Fox company's static budget shows $40,500 budgeted for direct materials, $54,000 budgeted for direct labor, and $13,500 budgeted for overhead. Fox's actual direct materials were $42,000, actual direct labor was $51,000, and actual overhead was $13,800. What is the total difference between the static budget and actual, and is the difference favorable or unfavorable? A : $4,800, unfavorableB : $1,200, unfavorableC : $4,800, favorableD : $1,200, favorable

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  1. 25 February, 05:31
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    correct option is D : $1,200, favorable

    Explanation:

    given data

    direct materials = $40,500

    direct labor = $54,000

    overhead = $13,500

    actual direct materials = $42,000

    actual direct labor = $51,000

    actual overhead = $13,800

    to find out

    total difference between the static budget and actual and difference favorable or unfavorable

    solution

    we know that If the actual is less than budget that is favorable condition

    and If the actual are more than the budgets, it is called as unfavorable condition

    so here

    Budgets Actual Condition

    Direct Materials 40500 42000 1500 unfavorable

    Direct Labors 54000 51000 3000 favorable

    Overheads 13500 13800 300 unfavorable

    so that Total Difference and Condition = 1200 favorable

    so correct option is D : $1,200, favorable
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