Question - The production team for Take Eight, Inc., a manufacturer of pillow top mattresses, recently prepared a manufacturing cost budget for an output of 50,000 mattresses, as follows:
Direct Materials $100,000
Direct Labor $50,000
Variable Overhead $75,000
Fixed Overhead $100,000
Actual costs incurred during the production of 60,000 mattresses were; direct materials, $110,000; direct labor, $60,000; variable overhead, $100,000; and fixed overhead, $97,000. If Take Eight evaluated performance by the use of a flexible budget, determine the dollar amount of the MOH flexible budget variance and if the variance is favorable or unfavorable.
A. $42,000 unfavorable
B. $3,000 favorable
C. $7,000 unfavorable
D. $23,000 favorable
E. $3,000 unfavorable