Question

Required

Compute variances for the following items and indicate whether each variance is favorable (F) or unfavorable (U): (Select "None" if there is no effect (i.e., zero variance).)

Item	Budget		Actual		Variance		Effect
Sales price	$656		$528
Sales revenue	$583,000		$606,000
Cost of goods sold	$389,500		$363,000
Material purchases at 5,000 pounds	$278,000		$284,500
Materials usage	$184,500		$181,000
Production volume	980	units	915	units		units
Wages at 4,000 hours	$60,600		$59,000
Labor usage at $16 per hour	$96,300		$97,600
Research and development expense	$25,000		$29,500
Selling and administrative expenses	$53,500		$43,000

Answer 1

Item	Budget		Actual		Variance (Budget - Actual)		Effect
Sales price	$656		$528		$128		Unfavorable
Sales revenue	$583,000		$606,000		$23,000		Favorable
Cost of goods sold	$389,500		$363,000		$26,500		Favorable
Material purchases at 5,000 pounds	$278,000		$284,500		$6,500		Unfavorable
Materials usage	$184,500		$181,000		$3,500		Favorable
Production volume	980	units	915	units	$65	units	Unfavorable
Wages at 4,000 hours	$60,600		$59,000		$1,600		Favorable
Labor usage at $16 per hour	$96,300		$97,600		$1,300		Unfavorable
Research and development expense	$25,000		$29,500		$4,500		Unfavorable
Selling and administrative expenses	$53,500		$43,000		$10,500		Favorable