ew History Bookmarks People Window Help Help Save& Piechocki Corporation manufac
ID: 2513951 • Letter: E
Question
ew History Bookmarks People Window Help Help Save& Piechocki Corporation manufactures and sells a single product. The company uses units as the measure of activity In its budgets and performance reports. During May, the company budgeted for 8,000 units, but its actual level of activity was 8,050 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for May Data used in budgeting Fixed Variable elenent elenent per month unit 35.50 Direct labor Direct materials Manufacturing overhead selling and administrative expenses Total expenses $ 6.10 o 12.10 1.80 26,800 0.80 $63,800 $20.80 37,000 Actual results for May Revenue Direet labor Direct materials Manufacturing overhead seiling and administrative expenses $ 30,600 $284,500 $ 48,530 92,330 $ 50,000 ?PreK 2ofmlll Next> 8 80 F6Explanation / Answer
Correct option is D
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Direct material spending variance = Actual cost of material-Flexible budget material cost
= 92330- (8050* 12.10)
= 92330 – 97405
= (5075) Unfavourable
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