Question

The company also established the following cost formulas for its selling expenses: Variable Cost per Unit Sold Fixed Cost per Month $200,000 $100,000 Advertising Sales salaries and commissions Shipping expenses $12.00 $ 3.00 The planning budget for March was based on producing and selling 25,000 units. However, during March the company actually produced and sold 30,000 units and incurred the following costs: a. Purchased 160,000 pounds of raw materials at a cost of $7.50 per pound. All of this material was used in production. b. Direct-laborers worked 55,000 hours at a rate of $15.00 per hour c. Total variable manufacturing overhead for the month was $280,500. d. Total advertising, sales salaries and commissions, and shipping expenses were $210,000, $455,000, and $115,000, respectively Foundational 9-13 13. What is the spending variance related to advertising? (Indicate the effect of egch variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.). Input the amount as a positive value.)

Answer 1

Answer:

Actual Cost – Advertising Expense = $210,000
Budgeted Advertising Expense = $200,000

Spending Variance = Actual Expense – Budgeted Expense
Spending Variance related to Advertising = $210,000 - $200,000
Spending Variance related to Advertising = $10,000 (Unfavourable)