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2 January, 10:10

Applet Systems is a start-up company that makes connectors for high-speed Internet connections. The company has budgeted variable costs of $ 130 for each connector and fixed costs of $ 4,500 per month. Applet 's static budget predicted production and sales of 100 connectors in August, but the company actually produced and sold only 72 connectors at a total cost of $ 19,000.

Applet's flexible budget variance for total costs is:

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  1. 2 January, 10:15
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    Applet's flexible budget variance for total costs is $5,140 unfavorable variance since actual is higher than budgeted cost

    Explanation:

    Flexible budget variance for total costs=actual total costs-budgeted total costs of 72 connectors

    actual total costs of 72 connectors=$19,000

    budgeted total costs of 72 connectors=budgeted fixed cost+budgeted total variable cost of 72 connectors

    total budgeted variable cost=72*$130=$ 9,360.00

    budgeted fixed cost is $4,500

    Budgeted total costs of 72 connectors=$9,360.00+$4,500.00=$ 13,860.00

    Flexible budget variance = $ 13,860.00-$19,000.00=$5140 unfavorable variance
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