Detailed Answer
Correct answer: (C)
$60,000 unfavorable
Static budget VMOH = $360,000; Static budget output units = 36,000
Therefore, budgeted VMOH rate = $360,000/36,000 = $10/unit
Actual output units =42,000, Therefore, Flexible Budget VMOH = 42,000 x 10 = $420,000.
SVV for VMOH = Flex amount – static amount = 420,000 – 360,000 = $60,000. This is unfavorable because this is a cost item where the flex budget amount is greater than the benchmark static budget amount.