Exercise 15-5 Determining amount and type (favorable vs. unfavorable) of varianc

Question

Exercise 15-5 Determining amount and type (favorable vs. unfavorable) of variance LO 15-3 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 $526 Item Actual Variance Effect Sales price Sales revenue Cost of goods sold Material purchases at 5,000 pounds Materials usage Production volume Wages at 4,000 hours Labor usage at $16 per hour Research and development expense Selling and administrative expenses 652 $ 602,000 681,000 $ 386,500 $361,000 281,500 S 179,000 S 276,000 S 181,500 905 units 960 units units $ 58,800 60,200 97,200 96,100 23,000 50,500 26,500 $ 41,000

Explanation / Answer

Item Budgeted Actual . variance. F or UF

Sales price $526 $652 $126 F

sales revenue $6,02,000 $5,81,000 $21,000 UF

cost of goods sold $3,61,000 $3,86,500 $25,500. UF

material purchases at 5000 pounds $2,81,500 $2,76,000 $5,500 F

Material usage $1,79,000 $1,81,500 $2,500 UF

Production volume 905 960 55. F

wages at 4000 hours $58,800 $60,200 $1,400 UF

Labor usage at $16 per hour $97,200 $96,100 $1,100 F

Research and development expense $26,500 $23,000 $3,500 F

selling and administrative expense $41,000 $50,500. $9,500 UF

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