AJ Company planned to make 10,000 pairs of shoes and spend $50,000 on leather fo

Question

AJ Company planned to make 10,000 pairs of shoes and spend $50,000 on leather for February. Due to higher than anticipated demand for shoes, AJ made 11,000 pairs of shoes and spent $53,000 on leather. Which of the following statements would not be a fair statement regarding AJ's performance on leather use? Leather prices during the period were as expected in the budget.
Answer


AJ's flexible budget for comparative purposes for February would be $55,000.

AJ used less leather per shoe than was allowed in the original budget.

AJ spent $3,000 over the flexible budget for leather.

AJ spent $2,000 under the flexible budget for leather.

Explanation / Answer

AJ Company planned to make 10,000 pairs of shoes and spend $50,000 on leather for February. Due to higher than anticipated demand for shoes, AJ made 11,000 pairs of shoes and spent $53,000 on leather. Which of the following statements would not be a fair statement regarding AJ's performance on leather use? Leather prices during the period were as expected in the budget. Answer AJ spent $3,000 over the flexible budget for leather.

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