Use the information below to answer the following questions. $\begin{array}{llc}&\text { Flexed Budget for April }&\text { Actual for April }\
\text { Output } & 40,000 \text { units } & 40,000 \text { units } \
\text { Sales } & \$ 500,000 & \$ 400,000 \
\text { Raw materials } & \$ 100,000 & \$ 88,000 \
\text { Labour } & \$ 250,000 & \$ 180,000 \
\text { Overheads } & \$ 325,000 & \$ 375,000
\end{array}$
-Refer to the table above. Which of these variance calculations is correct for Raw materials, Labour and Overheads respectively? Note: F - Favourable, U - Unfavourable (adverse).

Question

Quizplus · Accepted Answer

Raw materials variance is calculated as Budget - Actual = $100,000 - $88,000 = $12,000 Favourable because actual spending was less than budgeted. Labour variance is Budget - Actual = $250,000 - $180,000 = $70,000 Favourable for the same reason. Overheads variance is Budget - Actual = $325,000 - $375,000 = $50,000 Unfavourable because actual spending was more than budgeted.

Use the Information Below to Answer the Following Questions -Refer to the Table Above