Neaton Company has provided the following information for February 2018: Fixed E

Question

Neaton Company has provided the following information for February 2018:

Fixed Element

Variable Element

Actual Totals

Per Month

Per Unit Sold

for February

Revenue

$500

$909,000

Wages

$200,000

$80

$360,000

Office expense

$50

$87,500

Other expense

$70,000

$64,000

Neaton Company planned on selling 2,000 units in February, however, actual sales totaled 1,800 units.

Total expense spending variance for February is _______:

$7,500 U

$18,500 U

$7,500 F

$18,500 F

Fixed Element

Variable Element

Actual Totals

Per Month

Per Unit Sold

for February

Revenue

$500

$909,000

Wages

$200,000

$80

$360,000

Office expense

$50

$87,500

Other expense

$70,000

$64,000

Explanation / Answer

Expenses in flexible budget = 1800*(80+50)+200000+70000= $504000 Actual expenses = 360000+87500+64000= $511500 Total expense spending variance for February = 511500-504000 = $7500 U Option A is correct

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