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 at 11,500 actual hours = Fixed ₦5,000,000 + Variable (₦1,200 × 11,500) = ₦5,000,000 + ₦13,800,000 = ₦18,800,000. Actual costs incurred = ₦19,200,000. Total cost variance = Flexed budget – Actual = ₦18,800,000 – ₦19,200,000 = ₦400,000 Adverse. The variance is adverse because actual costs exceeded the flexed budget allowance. Option D incorrectly compares actual costs to the original fixed budget (₦5,000,000 + ₦12,000,000 = ₦17,000,000).