Diskind Corporation manufactures and sells a single product. The company uses un
ID: 2470930 • Letter: D
Question
Diskind Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During October, the company budgeted for 8,000 units, but its actual level of activity was 8,050 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for October: Data used in budgeting: Fixed element per month Variable element per tenant-day Revenue — $35.50 Direct labor $0 $6.10 Direct materials 0 12.10 Manufacturing overhead 37,000 1.80 Selling and administrative expenses 26,800 0.80 Total expenses $63,800 $20.80 Actual results for October: Revenue $284,500 Direct labor $48,530 Direct materials $92,330 Manufacturing overhead $50,000 Selling and administrative expenses $30,600 The activity variance for direct labor in October would be closest to:
$305 U
$305 F
$270 U
$270 F
Explanation / Answer
Data used in budgeting:
Details
Fixed element
per month
Variable element per tenant-day
Revenue
—
$ 35.50
Direct labor
$0
$ 6.10
Direct materials
0
$ 12.10
Manufacturing overhead
$ 37,000.00
$ 1.80
Selling and administrative expenses
$ 26,800.00
$ 0.80
Total expenses
$ 63,800.00
$ 20.80
Actual results for October:
Details
Amount
Revenue
$ 284,500
Direct labor
$ 48,530
Direct materials
$ 92,330
Manufacturing overhead
$ 50,000
Selling and administrative expenses
$ 30,600
The variance of Direct labor:
Details
Budgeted data
Actual data
Total
Direct labor
$ 6.1000
$ 6.0286
Number of units
8050
8050
Difference
$ 49,105.00
$ 48,530.23
$ 574.77
Therefore, the correct answer is activity variance for direct labor in October would be closest to $305F.
Data used in budgeting:
Details
Fixed element
per month
Variable element per tenant-day
Revenue
—
$ 35.50
Direct labor
$0
$ 6.10
Direct materials
0
$ 12.10
Manufacturing overhead
$ 37,000.00
$ 1.80
Selling and administrative expenses
$ 26,800.00
$ 0.80
Total expenses
$ 63,800.00
$ 20.80