Question

1. Trevorrow Corporation manufactures and sells a single product. The company uses units as the measure...

1. Trevorrow Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During June, the company budgeted for 6,200 units, but its actual level of activity was 6,160 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for June:

Data used in budgeting:

Fixed element per month Variable element per unit
Revenue - $ 27.80
Direct labor $ 0 $ 3.10
Direct materials 0 10.20
Manufacturing overhead 37,200 1.10
Selling and administrative expenses 22,800 0.30
Total expenses $ 60,000 $ 14.70

Actual results for June:

Revenue $ 178,318
Direct labor $ 18,606
Direct materials $ 60,652
Manufacturing overhead $ 43,896
Selling and administrative expenses $ 24,688

The overall revenue and spending variance (i.e., the variance for net operating income in the revenue and spending variance column on the flexible budget performance report) for June would be closest to:

Multiple Choice

  • $9,256 U

  • $9,256 F

  • $9,780 U

  • $9,780 F

2. Neeb Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During January, the company budgeted for 7,000 units, but its actual level of activity was 7,040 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for January:

Data used in budgeting:

Fixed element per month Variable element per unit
Revenue - $ 27.20
Direct labor $ 0 $ 3.20
Direct materials 0 9.70
Manufacturing overhead 44,300 1.10
Selling and administrative expenses 27,000 0.40
Total expenses $ 71,300 $ 14.40

Actual results for January:

Revenue $ 183,448
Direct labor $ 23,178
Direct materials $ 68,808
Manufacturing overhead $ 49,784
Selling and administrative expenses $ 30,246

The spending variance for manufacturing overhead in January would be closest to:

Multiple Choice

  • $2,216 U

  • $2,260 F

  • $2,260 U

  • $2,216 F

Homework Answers

Answer #1

Solution-1

$9780F

Detail working for your refrence

Computaiton of Revenue & Spending Variance- Trevorrow Corporation
Particulars Actual Revenue and spending variances Flexible Budget
Unit 6160 6160
Revenue $178,318.00 $7,070.00 F $171,248.00
Expenses:
Direct Labour $18,606.00 $490.00 F $19,096.00
Direct Material $60,652.00 $2,180.00 F $62,832.00
Manufacturign Overhead $43,896.00 $80.00 F $43,976.00
Selling & Admin Expense $24,688.00 $40.00 U $24,648.00
Total Expense $147,842.00 $2,710.00 F $150,552.00
Net Operating Income $30,476.00 $9,780.00 F $20,696.00

Solution-2:- 2260 F

Detial Working for your refrence

Computation of Spending Variance for Manufacturing Overhead
As per FlexibleBudget= 44300+1.10*7040=52044
Actual = 49784
Spending Variance= Flexibel Budget - Actual
52044-49784=2260F
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