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).) Budget Variance Effect Item Actual Sales price 532 664 Sales revenue 587,000 614,000 $ $ 395,500 Cost of goods sold 367,000 Material purchases at 5,000 pounds 290,500 282,000 Materials usage 190,500 185,000 units 935 units 1,020 units Production volume $ Wages at 4,000 hours $ 59,400 61,400 Labor usage at $16 per hour $ 98,400 $ 96,700 Research and development expense $ 29,000 35,500 Selling and administrative expenses 47,000 59,500

Answer 1

Item	Budget	Actual	variance	Effect
Sales price	532	664	132	F
Sales revenue	614000	587000	27000	U
Cost of goods sold	367000	395500	28500	U
Materials purchases at 5,000 pounds	290500	282000	8500	F
Materials usage	185000	190500	5500	U
Production Volume	935	1020	85	F
Wages at 4,000 hours	59400	61400	2000	U
Labor usage at $16 per hour	98400	96700	1700	F
Research and development expense	35500	29000	6500	F
Selling and administrative expenses	47000	59500	12500	U