1. Embertson Framing's cost formula for its supplies cost is $1,350 per month plus $16 per frame. For the month of June, the company planned for activity of 816 frames, but the actual level of activity was 812 frames. The actual supplies cost for the month was $14,680. The activity variance for supplies cost in June would be closest to: a. $64 U b. $64 F c. $274 U d. $274 F
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
1. Embertson Framing's cost formula for its supplies cost is $1,350 per month plus $16 per frame. For the month of June, the company planned for activity of 816 frames, but the actual level of activity was 812 frames. The actual supplies cost for the month was $14,680. The activity variance for supplies cost in June would be closest to:
a. $64 U
b. $64 F
c. $274 U
d. $274 F
2.MARRY Manufacuting reports the following information at year end. Actual overhead applied $257,000. Flexible budget based on standard hours $309,000. Flexible budget based on actual hours $293,000 What is the amount of the efficiency variance?
a. $36,000 (F)
b. $16,000 (UF)
c. $36,000 (UF)
d. $16,000 (F)
3.Venanzi Air uses two measures of activity, flights and passengers, in the cost formulas in its budgets and performance reports. The cost formula for plane operating costs is $40,720 per month plus $2,646 per flight plus $11 per passenger. The company expected its activity in September to be 62 flights and 288 passengers, but the actual activity was 64 flights and 289 passengers. The actual cost for plane operating costs in September was $214,430. The activity variance for plane operating costs in September would be closest to:
a. $6,490 F
b. $6,490 U
c. $5,303 U
d. $5,303 F
4.Dewberry Midwifery's cost formula for its wages and salaries is $1,960 per month plus $429 per birth. For the month of December, the company planned for activity of 128 births, but the actual level of activity was 130 births. The actual wages and salaries for the month was $56,020. The wages and salaries in the flexible budget for December would be closest to:
a. $56,872
b. $57,761
c. $56,020
d. $57,730
5.Lapinsky Air uses two measures of activity, flights and passengers, in the cost formulas in its budgets and performance reports. The cost formula for plane operating costs is $31,400 per month plus $2,148 per flight plus $7 per passenger. The company expected its activity in April to be 89 flights and 261 passengers, but the actual activity was 84 flights and 260 passengers. The actual cost for plane operating costs in April was $204,810. The spending variance for plane operating costs in April would be closest to:
a. $8,842 F
b. $19,589 U
c. $8,842 U
d. $19,589 F
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