Lenci 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 5,100 units, but its actual level of activity was 5,050 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 spending variance for manufacturing overhead in May would be closest to:
A) $160 U
B) $225 U
C) $225 F
D) $160 F

Question

Lenci 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 5,100 units, but its actual level of activity was 5,050 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 spending variance for manufacturing overhead in May would be closest to:
A) $160 U 
B) $225 U 
C) $225 F 
D) $160 F

Quizplus · Accepted Answer

11eacbfc_c5b4_82ea_8ffe_8be35998319b_TB7552_00 Because the actual expense is less than the flexible budget, the variance is favorable (F).

Lenci Corporation Manufactures and Sells a Single Product