Required Compute variances for the following items and indicate whether each var

Question

Required

Compute variances for the following items and indicate whether each variance is favorable (F) or unfavorable (U).

Item Budget Annual Variance F or U
sales revenue $580,000 $600,000
cost of goods sold $385,000 $360,000
material purchases
@ 5,000 pounds $275,000 $280,000
sales price $500 $489
production volume 950 units 900 units
wages @ 4,000 hours $60,000 $58,700
labor usage @ $16 per hr $96,000 $97,000
research & development
expense $22,000 $25,000
selling & administrative
expenses $49,000 $40,000

Explanation / Answer

sales revenue Budgeted $580,000 Actual $600,000 -Favourable variance Cost of goods sold Budgeted $385,000 Actual $360000-Favourable variance Materials purchases @5000 pounds Budgeted $275000,Actual $280,000-Unfavourable Sales price Budgeted$500,Actual $489- Unfavourable variance Production volume Budgeted 950 units, Actual 900 units-unfavourable wages@4000hours budgeted$60000 actuals$58700-Favourable variance labor usage@16per hr budgeted$96000 actual $97000-unfavourable Research and development expenses Budgeted$22000 actual $25000-unfavourable selling and administrative expenses Budgeted$49000 actual $40000-unfavourable

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