Georgia Inc. prepared a static budget for production of 20,000 units, which included an estimated $100,000 for direct labor. In the actual production of 24,000 units, $118,000 of direct labor were incurred.
1. Compared to a flexible budget, what is the spending variance for the period?
2. Compared to a flexible budget, what is the activity variance for the period?
Georgia Inc. | |||||||
Flexible Budget Performance Report | |||||||
Actual Results | Spending Variance | Flexible Budget | Activity Variance | Static Budget | |||
Expected No. of car wash | 24000 | 24000 | 20000 | ||||
Direct Labour Expense | 118000 | 2,000 | F | 120,000 | 20,000 | U | 100,000 |
Spending Variance | 2,000 | Favorable | |||||
Activity Variance | 20,000 | Unfavorable | |||||
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