Rogstad Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During March, the company budgeted for 6,700 units, but its actual level of activity was 6,670 units. The company has provided the following data concerning the formulas to be used in its budgeting:

-The activity variance for net operating income in March would be closest to:
A) $393 U
B) $2,963 U
C) $2,963 F
D) $393 F

Question

Rogstad Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During March, the company budgeted for 6,700 units, but its actual level of activity was 6,670 units. The company has provided the following data concerning the formulas to be used in its budgeting:
 
-The activity variance for net operating income in March would be closest to:
A) $393 U 
B) $2,963 U 
C) $2,963 F 
D) $393 F

Quizplus · Accepted Answer

11ea7761_177a_5e97_81a5_e9b306f306c5_TB2580_00 Because the flexible budget net operating income is less than the planning budget, the variance is unfavorable (U).

Rogstad Corporation Manufactures and Sells a Single Product