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 5,600 units, but its actual level of activity was 5,560 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 Revenue $29.00 Direct labor Direct materials Manufacturing overhead Selling and administrative expenses Total expenses 0 38,700 24,300 $63,000 $ 3.60 9.70 1.30 0.40 $15.00 Actual results for June: $165,382 $ 19,481 Revenue Direct labor

Explanation / Answer

Std revenue per unit: 29 Less: Std variable cost per unit 15 Std revenue per unit: 14 Budgeted Activity 5600 Actual activity 5560 Unfavorable activity level 40 Therfore, Activity variance: Std revenue per unit*Unfavorable activity level $ 14 per unit*40 units = $ 560 unfav Answer is $ 560 U

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