Trevorrow Corporation manufactures and sells a single product. The company uses

Question

Trevorrow Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During June, the company budgeted for 6,600 units, but its actual level of activity was 6,560 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for June Data used in budgeting Fixed Variable element element per per month unit $28.00 Revenue Direct labor Direct materials Manufacturing overhead Selling and administrative expenses Total expenses $ 3.50 10.30 37,600 23,200 $60,800 1.50 0.20 $15.50 Actual results for June Revenue Direct labor Direct materials Manufacturing overhead Selling and administrative expenses $190,896 $ 22,458 65,368 47,340 24,572 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 June would be closest to

Explanation / Answer

Actual Results A Revenue & Spending varaince A-F Flexible Budget F Revenue $190,896 $7,216 F 183680 Less: (6560*28) Direct material $22,458 $502 F 22960 (3.5*6560) Direct labor 65368 $2,200 F 67568 (10.3*6560) manufacturing overhead 47340 $100 F 47440 (1.5*6560)+37600 Selling & adm exp 24572 60 U 24512 (.2*6560)+23200 Net operating income $31,158 $9,958 F $21,200 Ans $9958 favorable If any doubt please comment

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