Question

Neeb Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During January, the company budgeted for 7,000 units, but its actual level of activity was 7,040 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for January:

Data used in budgeting:

	Fixed element per month			Variable element per unit
Revenue		-		$	27.20
Direct labor	$	0		$	3.20
Direct materials		0			9.70
Manufacturing overhead		44,300			1.10
Selling and administrative expenses		27,000			0.40
Total expenses	$	71,300		$	14.40

Actual results for January:

Revenue	$	183,448
Direct labor	$	23,178
Direct materials	$	68,808
Manufacturing overhead	$	49,784
Selling and administrative expenses	$	30,246

The spending variance for manufacturing overhead in January would be closest to:

Answer 1

Actual Manufacturing overhead	49784
Less: Manufacturing overhead in Flexible budget	52044	=44300+(7040*1.10)
Spending variance for manufacturing overhead	2260	Favorable (F)