ilson Corporation manufactures and sells a single product. The company uses unit

Question

ilson Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During April, the company budgeted for 5,100 units, but its actual level of activity was 5,060 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for April: Data used in budgeting: Fixed element per month Variable element per unit Revenue $35.90 Direct labor $0 $7.80 Direct materials 0 10.10 Manufacturing overhead 38,600 1.90 Selling and administrative expenses 21,000 0.40 Total expenses $59,600 $20.20 Actual results for April: Revenue $179,164 Direct labor $41,248 Direct materials $49,086 Manufacturing overhead $48,544 Selling and administrative expenses $22,354 The overall revenue and spending variance (i.e., the variance for net operating income in the revenue and spending variance column on the flexible budget performance report) for April would be closest to: $2,538 F $2,538 U $1,910 F $1,910 U Please show all work! Thanks.

Explanation / Answer

Ilson Corporation All Amounts in $ Variance Statement for Budgeted v/s Actuals for the month of April (No. of units considered = 5,060) Budgeted Actuals Variance Fixed Variable Total Revenue 181654 181654 179164 -2490 U Cost of Goods Sold Direct Material 51106 51106 49086 2020 F Direct Labor 39468 39468 41248 -1780 U Manufacturing Overheads 38600 9614 48214 48544 -330 U Selling and Admin Expenses 21000 2024 23024 22354 670 F Net Operating Income 19842 17932 -1910 U

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