A. The flexible budget overhead variance is favorable. The budgeted overhead is greater than actual which means the variance is favorable. See the correct answer for a complete explanation.

B. This is the flexible budget variance based on the master budget level of output of 1,800 units. Actual factory overhead of $39,930 - ([$3 × 3 × 1,800] + $27,000) budgeted fixed overhead = ($3,270) favorable. However, the actual level of production of 1,650 units should be used to calculate flexible budget amounts for variable costs, not the master budget level. See the correct answer for a complete explanation.

C. The flexible budget overhead variance is favorable. The budgeted overhead is greater than the actual, which means the variance is favorable. See the correct answer for a complete explanation.

D. The flexible budget overhead variance equals the difference between the total actual overhead incurred and the flexible budget total overhead (variable and fixed).

The flexible budget fixed overhead equals the master budget amount of $27,000. The budgeted variable factory overhead rate is $3 per labor hour, the standard hours to produce one unit of product is 3 hours, and 1,650 units were produced. Thus, the flexible budget variable factory overhead was $14,850.

The actual overhead costs were $39,930. The total flexible budget variable factory overhead is $41,850 ($14,850 + $27,000).  Therefore, the flexible budget overhead variance is ($1,920) favorable ($39,930 - $41,850). Since the actual overhead is less than the budgeted overhead, the variance is favorable.