Interspace Merchandising anticipated selling 29,000 units of a major product and paying sales commissions of $6 per unit.Actual sales and sales commissions totaled 31,500 units and $182,700,respectively.If the company used a static budget for performance evaluations,Interstate would report a cost variance of:
A)$6,300U.
B)$6,300F.
C)$8,700U.
D)$8,700F.
E)some other amount not listed abovE.

Question

Quizplus · Accepted Answer

The cost variance is calculated as the difference between the actual cost and the budgeted cost. The budgeted cost for sales commissions is 29,000 units x $6 = $174,000. The actual cost is $182,700. The variance is $182,700 - $174,000 = $8,700 unfavorable (U).

Interspace Merchandising Anticipated Selling 29,000 Units of a Major Product