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Hello. Can you explain this question, please?
A company operates a standard marginal costing system. Last month actual fixed overhead expenditure was 2% below budget and the fixed overhead expenditure variance was $1,250.
What was the actual fixed overhead expenditure for last month?
A $61,250
B $62,475
C $62,500
D $63,750If the expenditure variance is 1250 and this is 2% of budget, then the budget figure must be 1250 / 2% = $ 62,500
The actual figure is 2% below budget, and so the actual figure must be 62,500 – 1,250 = $61,250
If it was below budget , that means there was a favourable variance , wasn’t it?
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