Coderre Corporation manufactures and sells a single product. The company uses un
ID: 2463447 • Letter: C
Question
Coderre Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During July, the company budgeted for 7,000 units, but its actual level of activity was 6,950 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for July: Data used in budgeting: Fixed element per month Variable element per unit Revenue $34.50 Direct labor $0 $6.50 Direct materials 0 14.10 Manufacturing overhead 40,000 2.00 Selling and administrative expenses 25,800 .50 Total expenses $ 65,800 $23.10 Actual results for July: Revenue $241,350 Direct labor $45,210 Direct materials $99,030 Manufacturing overhead $45,000 Selling and administrative expenses $30,500 The spending variance for direct materials in July would be closest to
Explanation / Answer
The spending variance for direct materials in July would be closest to 1,035 U The spending variance for direct materials is known as the purchase price variance, Particulars Standard Actual Qty Rate amount Qty Rate amount Materials 6,950.00 14.10 97,995.00 6,950.00 14.25 99,030.00 Actual output 6,950.00 Materials reqd(6950*14.10) 97,995.00 DMPV = (SP-AP)*AQ DMPV = (14.10 - 14.25)6950 DMPV = (.1489)6950 DMPV = 1,035 U