Required Indicate whether each of the following variances is favorable or unfavo

Question

Required

Indicate whether each of the following variances is favorable or unfavorable. The first one has been done as an example.

Item to classify Standard Actual Type of Variances
materials cost $2.90 per pound $3.00 per pound unfavorable
materials usage 91,000 pounds 90,000 pounds
labor cost $10.00 per hour $9.60 per hour
labor usage 61,000 hours 61,800 hours
fixed cost spending $400,000 $390,000
fixed cost per unit (vol) $3.20 per unit $3.16 per unit
sales volume 40,000 42,000 units
sales price $3.20 per unit $3.63 per unit

Explanation / Answer

Item to classify Standard Actual Type of Variance Labor cost $10.00 $9.60 Favorable Labor usage 61,000 61,800 UNFAVORABLE Fixed cost spending $400,000 $390,000 FAVORABLE Fixed cost per unit(volume) $3.20 $3.16 FAVORABLE Sales volume 40,000 42,000 units FAVORABLE Sales price $3.60 $3.63 Favorable Materials cost $2.90 $3.00 Unfavorable Material usage 91,000 90,000 pounds Favorable

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