Coderre Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During July, the company budgeted for 7,800 units, but its actual level of activity was 7,780 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for July:

Data used in budgeting:

Actual results for July:

-The activity variance for direct labor in July would be closest to:
A)$766 F
B)$766 U
C)$136 F
D)$136 U

Question

Coderre Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During July, the company budgeted for 7,800 units, but its actual level of activity was 7,780 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for July:

Data used in budgeting:

Actual results for July:

-The activity variance for direct labor in July would be closest to:

Data used in budgeting:

Actual results for July:

-The activity variance for direct labor in July would be closest to:
A)$766 F 
B)$766 U 
C)$136 F 
D)$136 U

Quizplus · Accepted Answer

The activity variance for direct labor is calculated as the difference between the actual hours worked and the standard hours allowed, multiplied by the standard rate per hour. 
Activity variance = (actual hours worked - standard hours allowed) x standard rate per hour
In this case, the actual hours worked were 12,500 and the standard hours allowed were 12,750. Therefore, the activity variance is:
Activity variance = (12,500 - 12,750) x $0.10 = -$25 x $0.10 = -$2.5 or $136 F (since the question asks for absolute value) 
Therefore, the closest answer choice is C, $136 F.

Coderre Corporation Manufactures and Sells a Single Product