Required pute variances for the following items and indicate whether each varian

Question

Required pute 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).) Actual Varlanc $652 Effect S 526 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 $16 per hour Research and development expense Selling and administrative expenses | s 602,000 $ 581,000! S 361,000 S 386,500 281,500276,000 S 179,000 S 181,500 905 960 units $ 58,800 $ 97.200 s S 60,200 $ 96,1001 $ $ 50,500 26.500. S 41,000 23.0001

Explanation / Answer

F = FAVOURABLE

U = UNFAVOURABLE

Items Budget Actual Variance Effect Sales price 526 652 126 F Sales revenue 602000 581000 21000 U Cost of goods sold 361000 386500 25500 U Material purchases at 5000 pounds 281500 276000 5500 F Material usage 179000 181500 2500 U Production volume 905 960 55 F Wages at 4000 hours 58800 60200 1400 U Labor usage at $16 per hour 97200 96100 1100 F Reasearch and development expense 26500 23000 3500 F Selling and administrative expense 41000 50500 9500 U *When sales increases it is favourable and decreases is unfavourable. *When any cost or expenses increases it is unfavourable and decreases is favourable. *Increase in production units is favourable.

F = FAVOURABLE

U = UNFAVOURABLE

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