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 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 October:

Data used in budgeting:
Actual results for October:
-The spending variance for direct materials in October would be closest to:
A)$1,295 F
B)$2,010 U
C)$2,010 F
D)$1,295 U

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 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 October:

Data used in budgeting:

Actual results for October:

-The spending variance for direct materials in October would be closest to:

Data used in budgeting:
 Actual results for October: 
-The spending variance for direct materials in October would be closest to:
A)$1,295 F 
B)$2,010 U 
C)$2,010 F 
D)$1,295 U

Quizplus · Accepted Answer

The spending variance is calculated as the difference between the actual cost and the standard cost of direct materials. A variance is unfavorable (U) if the actual cost is higher than the standard cost.

Diskind Corporation Manufactures and Sells a Single Product