Vandall corporation manufactures and sells a single product. The company uses un
ID: 2386281 • Letter: V
Question
Vandall corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During April, the company budgeted for 7,300 units, but its actural level of activity was 7,340 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for April:Data used in budgeting
Variable element per month Fixed element per month
$35.40 __________ Revenue
$3.30 0 Direct labor
15.90 0 Direct materials
1.20 49,200 Manufacturing overhead
0.10 $26,600 Selling & administrative expenses
$20.50 $75,800 Total expenses
Actual results for April:
Revenue $254,146
Direct labor $24,722
Direct materials $116,496
Manufacturing overhead $59,608
Selling and administrative expenses $26,494
The overall revenue and spending variance (i.e. the variance for net operating income in the revenue and spending variance column on the flexible budget performance report) for April would be closest to
A.$6,144 U
B.$6,740 U
C.$6,740 F
D.$6,144 F
***Please SHOW HOW to get this
Explanation / Answer
Flexible Budget Units 7340 Per Unit 7300 Per Unit Revenue 254146 34.6248 258420 35.4 less:Direct labor 24722 3.36812 24090 3.3 Direct materials 116496 15.87139 116070 15.9 Manufacturing overhead 59608 8.120981 57960 (49,200 + 1.20) Selling and administrative exp 26494 3.609537 27330 26,600 + 0.10 26826 32970 Variance = 26826 - 32970 = -6144 A.$6,144 U unfavourable
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