Chapter 15, Problem 5E

Exercise 8-3A Determining amount and type (favorable vs. unfavorable) of variance

Required

Compute variances for the following items and indicate whether each variance is favorable (F) or unfavorable (U):

Item	Budget	Actual	Variance	F or U
Sales price	$400	$390
Sales revenue	$360,000	$390,000
Cost of goods sold	$192,500	$180,000
Material purchases at 5,000 pounds	$137,500	$140,000
Materials usage	$90,000	$89,000
Production volume	950 units	900 units
Wages at 4,000 hours	$30,000	$29,350
Labor usage at $12 per hour	$48,000	$48,500
Research and development expense	$11,000	$12,500
Selling and administrative expenses	$24,500	$20,000