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

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