Dynamo Building Supply Company's Management Is Calculating the Variable Overhead

question 73

Multiple Choice

Dynamo Building Supply Company's management is calculating the variable overhead flexible-budget variance for 2012.The actual variable overhead costs incurred amounted to $245,000 while the flexible budgeted amount was $230,000.
Required
Compute the variable overhead flexible-budget variance for Dynamo Building Supply Company and identify whether the variance is favorable,F,or unfavorable,U.

• A)$575,000;U
• B)$15,000;F
• C)$15,000;U
• D)$575,000;F
• E)$56,350;U

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Definitions:

Sale-leaseback Transaction

A financial transaction where one party sells an asset and then leases it back from the buyer, generally to free up capital while retaining the use of the asset.

Capital Lease

A leasing arrangement considered to have the economic characteristics of asset ownership for accounting purposes.

Retained Earnings

The portion of a company's profits that is kept or retained rather than distributed to shareholders or used to pay dividends, often reinvested into the business.