Gridiron Merchandising anticipated selling 27,000 units of a major product and paying sales commissions of $6 per unit.Actual sales and sales commissions totaled 27,500 units and $171,400,respectively.If the company used a flexible budget for performance evaluations,Gridiron would report a cost variance of:
A)$6,400U.
B)$6,400F.
C)$9,400U.
D)$9,400F.
E)some other amount not listed abovE.

Question

Quizplus · Accepted Answer

The flexible budget would anticipate sales commissions of $6 per unit for 27,500 units, totaling $165,000. The actual sales commissions were $171,400, resulting in a cost variance of $6,400 unfavorable (U).

Gridiron Merchandising Anticipated Selling 27,000 Units of a Major Product