Spirer Corporation manufactures and sells a single product. The company uses uni

Question

Spirer Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During September, the company budgeted for 6,700 units, but its actual level of activity was 6,750 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for September: Data used in budgeting: Picture Actual results for September: Picture The activity variance for direct labor in September would be closest to: $360 U $360 F $880 F $880 U

Explanation / Answer

Keeping all other factors constant, the direct labour resulted in an excess output over budgeted i.e. Favourable. As the increase in output is a small amout, hence 360 F .

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