Lenci Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During May, the company budgeted for 5,100 units, but its actual level of activity was 5,050 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for May:
Data used in budgeting:
Actual results for May:

-The overall revenue and spending variance (i.e.,the variance for net operating income in the revenue and spending variance column on the flexible budget performance report)for May would be closest to:
A) $3,595 F
B) $2,750 F
C) $2,750 U
D) $3,595 U

Question

Lenci Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During May, the company budgeted for 5,100 units, but its actual level of activity was 5,050 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for May:
Data used in budgeting:
  Actual results for May:
 
-The overall revenue and spending variance (i.e.,the variance for net operating income in the revenue and spending variance column on the flexible budget performance report)for May would be closest to:
A) $3,595 F 
B) $2,750 F 
C) $2,750 U 
D) $3,595 U

Quizplus · Accepted Answer

11ea7761_1783_ada7_81a5_cbed2289145f_TB2580_00 11ea7761_1783_d4b8_81a5_15d4168b1b1d_TB2580_00 Because the actual net operating income is less than the flexible budget, the variance is unfavorable (U).

Lenci Corporation Manufactures and Sells a Single Product