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Georgia Inc. prepared a static budget for production of 20,000 units, which included an estimated $100,000...

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?

Business   Accounting   
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Answer #1
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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