Question

Indy Auto's cost formula for its supplies cost is $1,500 per month plus $10 per frame. For the month of October, the company planned for activity of 592 frames, but the actual level of activity was 597 frames. The actual supplies cost for the month was $7,050. The activity variance for supplies cost in October would be closest to: $50 Unfavorable O$100 Favorable $100 Unfavorable $ 50 Favorable O None of the above

Answer 1

Planning budget $1,500 +($10x592) Less: Flexible budget $1,500+ ($10x597) Activity variance $7,420 $7,470 $50 Flexible budget is more than planning budget for supplies cost. Thus, the activity variance for supplies cost in October is $50 unfavorable. July Budgeted sales Required ending inventory (15%x6,000) Total needs Less: Required beginning inventory(15%x5,400) Number of units produced in July 5,400 900 6,300 -810 5,490 Answer: Total no. of units produced in July should be 5,490 units.