budgeted units = 1,400; budgeted overhead = $40,650
budgeted overhead per unit = $29.035714
actual units = 1,586; actual overhead = $41,600
Variance = (Actual units - Budgeted units) * budgeted overhead per unit
V = (1,586 - 1400) * $29.035714 = $5,400.64
this variance is favorable because the actual expense was less than the budgeted (expected) expense. had the units been built at the expected (budgeted) rate, the overhead cost would have been $46,050.
if we subtract $41,600 from $46,050 we get $5,400.
Sagnik B.
01/03/15