Preston Products provides the following data for the year: Actual production and sales for the year 195 units Budgeted production and sales for the year 200 units Budgeted fixed costs $540,000 Actual fixed costs $600,000 What is the fixed overhead flexible-budget variance for Preston Products?

A. $60,000 U

Explanation:

Given that

Budgeted fixed cost = 540,000

Actual fixed cost = 600,000

Recall that,

fixed overhead flexible-budget variance = Actual amount - standard (budgeted) amount

Thus,

Variance = 600,000 - 540,000

= $60,000 Unfavorable

It is unfavorable because the actual cost is higher than the budgeted cost. When actual cost is less than budgeted cost, it is favorable.