Y Company planned to produce 12,000 units. Processing required 16,000 machine hours at a cost of $15,000 + $10.50 per machine hour. Actual sales were 14,000 units requiring 20,000 machine hours. Actual processing cost was $222,000. is the static-budget variance for processing. Group of answer choices $42,000 unfavorable $39,000 unfavorable $39,000 favorable $42,000 favorable

$39,000 unfavorable

Explanation:

In static budget the values do not change even if there is any significant change in volume or activity. The value are fixed  and the variance are calculated from these fixed amounts.

Budgeted machine hours = 16,000 hours

Budgeted cost = $15,000 + $10.5 per machine hour = $15,000 + 10.5 x 16,000 = $183,000

Actual cost = $222,000

Variance = Actual cost - Budgeted cost = $222,000 - $183,000 = $39000

It is an unfavorable variance because actual cost is more that the budgeted, company has incurred more expenses than they planned.

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