At Ergonomics, Inc., each department’s expenses are reviewed monthly. A department can fail to pass the budget variance test in a category if either (i) the absolute value of the difference between actual expenses and the budget is more than $500 or (ii) the absolute value of the difference between the actual expenses and the budget is more than 5% of the budgeted amount. Which of the following items fail the budget variance test? Explain your answers.
Item | Budgeted Expense ($) | Actual Expense ($) |
Wages | 220,750 | 221,239 |
Overtime | 10,500 | 11,018 |
Shipping and Postage | 530 | 589 |
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