At the end of 20x1, SWP Corporation prepared its master budget for 20x2. Selected amounts from that budget, along with actual results for 20x2, are presented below: Budgeted Actual
Sales $180,000 $210,000
Research and development cost 25,000 20,000
Interest revenue 7,600 7,000
Cost of goods sold 60,000 65,000
Marketing costs 45,000 45,000
The research and development cost variance could be explained by:
A)Starting too many projects
B)Cost increases due to new information technologies
C)Efficient cost management
D)Higher salaries

Question

Quizplus · Accepted Answer

The actual research and development cost of $20,000 is $5,000 less than the budgeted amount of $25,000. This indicates efficient cost management as the reason for the variance, as the company was able to spend less than what was initially budgeted to complete its research and development projects.

At the End of 20x1, SWP Corporation Prepared Its Master