Requirec Compute variances for the following items and indicate whether each var

Question

Requirec Compute variances for the following items and indicate whether each variance is favorable (F) or unfavorable (U): (Select "None" if there is no effect (i.e., zero variance).) Item Budget Actual Variance Effect $ 400 $ 360,000 $192,500 $ 137,500 $ 90,000 Sales price Sales revenue Cost of goods sold Material purchases at 5,000 pounds Materials usage Production volume Wages at 4,000 hours Labor usage at $12 per hour Research and development expense Selling and administrative expenses $390 $ 390,000 $ 180,000 $ 140,000 $ 89,000 950 units 900 units units $30,000 $ 48,000 $ 11,000 $ 24,500 $ 29,350 $ 48,500 $ 12,500 $ 20,000

Explanation / Answer

Item

Budget

Actual

Variance

Effect

(Budget – Actual)/(Actual – Budget)

Sales price

400

390

10

U

Sales revenue

360000

390000

30000

F

Cost of goods sold

192500

180000

12500

F

Material purchases at 5000 pounds

137500

140000

2500

U

Materials usage

90000

89000

1000

F

Production volume

950

900

50 units

U

Wages at 4000 hours

30000

29350

650

F

Labor usage at $12 per hour

48000

48500

500

U

Research and development expense

11000

12500

1500

U

Selling and administrative expenses

24500

20000

4500

F

Item

Budget

Actual

Variance

Effect

(Budget – Actual)/(Actual – Budget)

Sales price

400

390

10

U

Sales revenue

360000

390000

30000

F

Cost of goods sold

192500

180000

12500

F

Material purchases at 5000 pounds

137500

140000

2500

U

Materials usage

90000

89000

1000

F

Production volume

950

900

50 units

U

Wages at 4000 hours

30000

29350

650

F

Labor usage at $12 per hour

48000

48500

500

U

Research and development expense

11000

12500

1500

U

Selling and administrative expenses

24500

20000

4500

F

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