MacPhail Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During April, the company budgeted for 5,600 units, but its actual level of activity was 5,650 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for April:

Data used in budgeting:

Actual results for April:
-The spending variance for direct materials in April would be closest to:
A)$3,215 U
B)$2,260 U
C)$2,260 F
D)$3,215 F

Question

MacPhail Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During April, the company budgeted for 5,600 units, but its actual level of activity was 5,650 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for April:

Data used in budgeting:

Actual results for April:

-The spending variance for direct materials in April would be closest to:

Data used in budgeting:

Actual results for April: 
-The spending variance for direct materials in April would be closest to:
A)$3,215 U 
B)$2,260 U 
C)$2,260 F 
D)$3,215 F

Quizplus · Accepted Answer

The spending variance for direct materials is calculated by comparing the actual cost to the standard cost for the actual quantity used. The choice $2,260 U indicates an unfavorable variance, meaning the actual cost was higher than the standard cost by $2,260.

MacPhail Corporation Manufactures and Sells a Single Product