Question

24 Piechocki Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During May, the company budgeted for 6,600 units, but its actual level of activity was 6,550 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for May: Data used in budgeting: Fixed element per month Variable element per unit $34.10 Revenue Direct labor Direct materials Manufacturing overhead Selling and administrative expenses Total expenses 36,000 25,400 $61,400 $ 6.10 13.70 1.60 0.80 $22.20 Actual results for May: Revenue Direct labor Direct materials Manufacturing overhead Selling and administrative expenses $224,900 $ 39,870 $ 91,500 $ 43,000 $ 30,460 The spending variance for direct materials in May would be closest to: Multiple Choice O $1,080 $1,080 F O $1,765F Oo oo O $1,765 U

Answer 1

Material spending variance = Standard material cost - Actual material cost

= 6550*13.70 - 91500

= $1765 Unfavorable