Problem

Determining amount and type (favorable vs. unfavorable) of varianceRequiredCompute varianc...

Determining amount and type (favorable vs. unfavorable) of variance

Required

Compute variances for the following items and indicate whether each variance is favorable (F) or unfavorable (U).

Item

Budget

Actual

Variance

F or U

Sales price

$650

$525

 

 

Sales revenue

$580,000

$600,000

 

 

Cost of goods sold

$385,000

$360,000

 

 

Material purchases at 5,000 pounds

$275,000

$280,000

 

 

Materials usage

$180,000

$178,000

 

 

Production volume

950 units

900 units

 

 

Wages at 4,000 hours

$60,000

$58,700

 

 

Labor usage at $16 per hour

$96,000

$97,000

 

 

Research and development expense

$22,000

$25,000

 

 

Selling and administrative expenses

$49,000

$40,000

 

 

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