Rogstad Corporation manufactures and sells a single product. The company uses un

Question

Rogstad Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During March, the company budgeted for 6,700 units, but its actual level of activity was 6,670 units. The company has provided the following data concerning the formulas to be used in its budgeting Fixed Variable element element per month uni Revenue $34.00 Direct labor Direct materials Manufacturing overhead Selling and administrative expenses Total expenses se 7.260 e 12.00 1.30 40 $63,700$28.90 40,500 23,200 The activity varlance for net operating income in March would be closest to:

Explanation / Answer

Computation of Total Variable cost/Unit and Fixed Cost Particular Variable Cost/Unit Fixed Cost Direct Labour $7.20 Direct Materia $12.00 Manufacturing Overhead $1.30 $40,500.00 Selling & Administration Expense $0.40 $23,200.00 Total Expense $20.90 $63,700.00 Computation of Net Operating Income Particular Budgeted at 6700 Unit Actual At 6670 Unit Revenue@ $34 $227,800.00 226780 Less: Variable cost @ $20.90 $140,030.00 $139,403.00 Less: Fixed Cost $63,700.00 $63,700.00 Net Operating Income $24,070.00 $23,677.00 Hence Variance in Net operating Income ( $24070-$23677)=$393 UF

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