Limerick Corporation has provided the following information for February 2018: F

Question

Limerick Corporation has provided the following information for February 2018:

Fixed Element

Variable Element

Actual Totals

Per Month

Per Unit Sold

for February

Revenue

$40

$390,000

Wages

$200,000

$12

$250,500

Office expense

$7

$60,000

Other expense

$70,000

$73,250

Limerick Corporation planned on selling 10,000 units in February, however, actual units sales totaled 9,500 units.

The activity variance for revenue is _______ Blank 1.

The activity variance for total expenses is _______ Blank 2.

The activity variance for net operating income is _______ Blank 3.

You must enter your answers in the following formats:

For favorable variances: $x,xxx F

For unfavorable variances: $x,xxx U

Fixed Element

Variable Element

Actual Totals

Per Month

Per Unit Sold

for February

Revenue

$40

$390,000

Wages

$200,000

$12

$250,500

Office expense

$7

$60,000

Other expense

$70,000

$73,250

Explanation / Answer

a) Activity variance for revenue : (10000-9500)*40 = $20,000 U

b) Activity variance for total expense = (10000-9500)*19 = $9,500 F

c) Activity variance for net operating income = 20000U-9500 F = $10,500 U

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