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 spending variance for direct materials in May would be closest to:
A) $2,434 U
B) $1,950 U
C) $2,434 F
D) $1,950 F

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 spending variance for direct materials in May would be closest to:
A) $2,434 U 
B) $1,950 U 
C) $2,434 F 
D) $1,950 F

Quizplus · Accepted Answer

11ea7761_176e_5068_81a5_f53b480a8114_TB2580_00 Because the actual expense is greater than the flexible budget, the variance is unfavorable (U).

Piechocki Corporation Manufactures and Sells a Single Product