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 5,900 units, but its actual level of activity was 5,940 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:
Actual results for May:
The activity variance for direct labor in May would be closest to:
A) $156 U
B) $156 F
C) $224 F
D) $224 U

Question

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 5,900 units, but its actual level of activity was 5,940 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:
 Actual results for May:
 The activity variance for direct labor in May would be closest to:
A) $156 U 
B) $156 F 
C) $224 F 
D) $224 U

Quizplus · Accepted Answer

11eacbfc_c592_7bf8_8ffe_8572676aad59_TB7552_00 Because the flexible budget is greater than the planning budget, the variance is unfavorable (U).

Piechocki Corporation Manufactures and Sells a Single Product