Baugus Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During August, the company budgeted for 6,900 units, but its actual level of activity was 6,950 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for August:
-The spending variance for direct materials in August would be closest to:
A) $70 F
B) $855 U
C) $70 U
D) $855 F

Question

Baugus Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During August, the company budgeted for 6,900 units, but its actual level of activity was 6,950 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for August: 
-The spending variance for direct materials in August would be closest to:
A) $70 F 
B) $855 U 
C) $70 U 
D) $855 F

Quizplus · Accepted Answer

The spending variance is the difference between the actual spending and the budgeted spending. In this case, the actual spending is $855 and the budgeted spending is $785. Therefore, the spending variance is $855 - $785 = $70.

Baugus Corporation Manufactures and Sells a Single Product