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 6,400 units, but its actual level of activity was 6,350 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:

	Fixed element per month			Variable element per unit
Revenue		-		$	33.90
Direct labor	$	0		$	5.90
Direct materials		0			13.50
Manufacturing overhead		34,000			1.40
Selling and administrative expenses		25,200			0.60
Total expenses	$	59,200		$	21.40

Actual results for May:

Revenue	$	216,300
Direct labor	$	36,930
Direct materials	$	86,900
Manufacturing overhead	$	42,000
Selling and administrative expenses	$	30,440

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

Multiple Choice

• $500 F

• $1,175 U

• $1,175 F

• $500 U

Answer 1

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