Tos Corporation's flexible budget cost formula for indirect materials,a variable cost,is $0.60 per unit of output.If the company's performance report for last month shows a $800 unfavorable spending variance for indirect materials and if 9,000 units of output were produced last month,then the actual costs incurred for indirect materials for the month must have been:
A) $5,600
B) $4,600
C) $5,400
D) $6,200

Question

Quizplus · Accepted Answer

11ea7761_1750_8f9d_81a5_29ea1b60bd1a_TB2580_00 Flexible budget = $0.60 × 9,000 = $5,400
 11ea7761_1750_8f9e_81a5_2b54e8c88388_TB2580_00 Unfavorable Spending Variance implies Actual Results > Flexible Budget
$800 = Actual results - Flexible budget
$800 = Actual results - $5,400
Actual results = $5,400 + $800 = $6,200

Tos Corporation's Flexible Budget Cost Formula for Indirect Materials,a Variable