Harold Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During March, the company budgeted for 7,900 units, but its actual level of activity was 7,860 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for March: Data used in budgeting:
Actual results for March:
The spending variance for direct materials in March would be closest to:
A) $5,630 F
B) $6,350 F
C) $5,630 U
D) $6,350 U

Question

Harold Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During March, the company budgeted for 7,900 units, but its actual level of activity was 7,860 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for March: Data used in budgeting:
 Actual results for March:
 The spending variance for direct materials in March would be closest to:
A) $5,630 F 
B) $6,350 F 
C) $5,630 U 
D) $6,350 U

Quizplus · Accepted Answer

11eacbfc_c591_9191_8ffe_512cedf93976_TB7552_00 Because the actual expense is less than the flexible budget, the variance is favorable (F).

Harold Corporation Manufactures and Sells a Single Product