31 Classifying variances as favorable or unfavorable Indicate whether each of th

Question

31 Classifying variances as favorable or unfavorable

Indicate whether each of the following variances is favorable (F) or unfavorable (U). The first one has been done as an example. (Select "None" if there is no effect (i.e., zero variance).)

STANDARD ACTUAL TYPE OF VARIANCE (F) (U) or (None)

Sales volume 40,700 42,700 _______________

Sales price $3.67 per unit $3.70 per unit ______________

Material cost $3.60 per pound $3.70 per pound ______________

Material usage 91,700 pounds 90,700 pounds ______________

Labor cost $10.70 per hour $10.30 per hour _____________

Labor usage 61,700 hours 62,500 hours _____________

Fixed cost spending $407,000 $397,000 _____________

Fixed cost-per unit(volume) 3.27 per unit 3.23 per unit _____________

  

Required

Indicate whether each of the following variances is favorable (F) or unfavorable (U). The first one has been done as an example. (Select "None" if there is no effect (i.e., zero variance).)

STANDARD ACTUAL TYPE OF VARIANCE (F) (U) or (None)

Sales volume 40,700 42,700 _______________

Sales price $3.67 per unit $3.70 per unit ______________

Material cost $3.60 per pound $3.70 per pound ______________

Material usage 91,700 pounds 90,700 pounds ______________

Labor cost $10.70 per hour $10.30 per hour _____________

Labor usage 61,700 hours 62,500 hours _____________

Fixed cost spending $407,000 $397,000 _____________

Fixed cost-per unit(volume) 3.27 per unit 3.23 per unit _____________

  

  

Explanation / Answer

Particulars Standard Actual Type Of Variance Reason Sales Volume          40,700.00     42,700.00 F Since company has sold more units Sales Price per unit                     3.67                3.70 F Since it will result in more sales revenue Material cost per pound                     3.60                3.70 U Since company has paid more than planned Material usage in pounds          91,700.00     90,700.00 F Since company has consumed less materials it has worked efficiently Labour cost per hour                   10.70              10.30 F Since company has paid less than planned Labour usage in hours          61,700.00     62,500.00 U Since labour has worked inefficiently. They have taken more time than allowed Fixed Cost spending        407,000.00 397,000.00 F Since less cost has been incurred Fixed cost per unit                     3.27                3.23 F Since less cost has been incurred

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