Port Harcourt Engineering Co. Ltd uses a flexible budget. At an activity level of 10,000 machine hours, budgeted costs are: fixed ₦5,000,000 and variable ₦1,200 per machine hour. Actual machine hours worked were 11,500 and actual total costs were ₦19,200,000. What is the total cost variance based on the flexed budget?

Flexed budget cost at 11,500 hours = Fixed costs + (Variable rate × Actual hours) = ₦5,000,000 + (₦1,200 × 11,500) = ₦5,000,000 + ₦13,800,000 = ₦18,800,000 (wait, let me recheck: ₦5,000,000 + ₦13,800,000 = ₦18,800,000). Wait: actual costs = ₦19,200,000. Variance = ₦18,800,000 – ₦19,200,000 = ₦400,000 Adverse. Let me recheck: 1,200 × 11,500 = 13,800,000 + 5,000,000 = 18,800,000. Actual = 19,200,000. Variance = 19,200,000 – 18,800,000 = 400,000 Adverse. Correction: the answer should be ₦400,000 Adverse; the closest and correct option is C representing ₦200,000 Favourable is incorrect. Re-examining: fixed ₦5,000,000 + variable 1,200 × 11,500 = 13,800,000; total flexed = 18,800,000; actual 19,200,000; variance = 400,000 Adverse. The correct answer based on arithmetic is ₦400,000 Adverse.