Coderre Corporation manufactures and sells a single product. The company uses un
ID: 2515497 • 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 6,700 units, but its actual level of activity was 6,650 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 — $34.20 Direct labor $0 $6.20 Direct materials 0 13.80 Manufacturing overhead 37,000 1.70 Selling and administrative expenses 25,500 0.20 Total expenses $62,500 $21.90 Actual results for July: Revenue $228,900 Direct labor $41,130 Direct materials $93,235 Manufacturing overhead $43,500 Selling and administrative expenses $30,470 The revenue variance for July would be closest to:
Explanation / Answer
Actual Revenue = $228,900
Actual Level of activity = 6,650 units
Budgeted Revenue per unit = $34.20
Flexible Budget Revenue = Actual Level of activity * Budgeted Revenue per unit
Flexible Budget Revenue = 6,650 * $34.20
Flexible Budget Revenue = $227,430
Revenue Variance = Actual Revenue - Flexible Budget Revenue
Revenue Variance = $228,900 - $227,430
Revenue Variance = $1,470 Favorable