Barrington Industries 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, Barrington would report a cost variance of:

Question

Quizplus · Accepted Answer

The static budget for sales commissions would be 29,000 units * $6 = $174,000. The actual cost was $182,700, leading to a variance of $182,700 - $174,000 = $8,700 unfavorable (U), because the actual cost was higher than the budgeted cost.

Barrington Industries Anticipated Selling 29,000 Units of a Major Product