Fox company’s static budget shows $27,000 budgeted for direct materials, $36,000 budgeted for direct labor, and $9,000 budgeted for overhead. fox’s actual direct materials were $28,000, actual direct labor was $34,000, and actual overhead was $9,200. what is the total difference between the static budget and actual, and is the difference favorable or unfavorable?

$800, favorable

Explanation:

In the statistical budget, calculations for all items in a budget, such as revenues, costs, expenses, and investments, are made from predefined estimates. These estimates can be production, sales, or any other variable that the company wants to use as a guide. With these values defined, the area that distributes money to others can predict with the budget for each. And from it, you can understand what will be the maximum spending on personnel, raw materials, suppliers and others. In the case of the above question, the Fox Company static budget shows $ 27,000 in the direct materials budget, $ 36,000 in the direct labor budget, and $ 9,000 in the overheads budget.

Real budgeting is a business budgeting mode that takes a closer look at a company's variable costs. In fact, more freely, it can be said that the practice of real budgeting considers almost everything as variable cost. Budget pieces are no longer fixed based on a predetermined estimate of production or sales. In the case of the above question, the actual budget for Fox's actual direct materials was $ 28,000, the actual direct labor was $ 34,000, and the actual overhead was $ 9,200.

In order to know whether the total difference between the static and the real budget is favorable or unfavorable, we have to sum the entire statistical budget and subtract the result by the sum of the real statistical budget. If the result is positive, the difference is favorable, if it is negative, the difference is unfavorable. In the case of the above question, we can calculate that:

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