Question

Required Compute variances for the following items and indicate whether each variance is favorable (F) or unfavorable (U): (Select "None" if there is no effect (i.e., zero variance).) Item V ariance Effect Sales price Sales revenue Cost of goods sold Material purchases at 5,000 pounds Materials usage Production volume Wages at 4,000 hours Labor usage at $16 per hour Research and development expense Selling and administrative expenses Budget $ 652 $ 581,000 $ 386,500 $ 276,000 $ 181,500 960 units $ 60,200 $ 96,100 $ 23,000 $ 50,500 Actual $ 526 $ 602,000 $ 361,000 $ 281,500 $ 179,000 905 units $ 58,800 $ 97,200 $ 26,500 $ 41,000 units

Answer 1

Correct Answer:

	A	B	C =A-B
Items	Budget	Actual	Variance	Effect
Sales price	$                  652	$                    526	$               126	F
Sales revenue	$          581,000	$           602,000	$       (21,000)	F
Cost of goods sold	$          386,500	$           361,000	$         25,500	F
Material purchase at 5000 pounds	$          276,000	$           281,500	$         (5,500)	U
Material usage	$          181,500	$           179,000	$            2,500	F
Production volume	960 units	905 units	55 units	U
wages at 4000 hours	$            60,200	$              58,800	$            1,400	F
labor usage at $ 16 per hour	$            96,100	$              97,200	$         (1,100)	U
Research and development expense	$            23,000	$              26,500	$         (3,500)	U
Selling and administrative expense	$            50,500	$              41,000	$            9,500	F

End of answer.

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