Coderre Corporation manufactures and sells a single product.The company uses units as the measure of activity in its budgets and performance reports.During July,the company budgeted for 7,800 units,but its actual level of activity was 7,780 units.The company has provided the following data concerning the formulas used in its budgeting and its actual results for July: Data used in budgeting: Actual results for July: The spending variance for direct materials in July would be closest to:

Question

Coderre Corporation manufactures and sells a single product.The company uses units as the measure of activity in its budgets and performance reports.During July,the company budgeted for 7,800 units,but its actual level of activity was 7,780 units.The company has provided the following data concerning the formulas used in its budgeting and its actual results for July: Data used in budgeting:  Actual results for July:  The spending variance for direct materials in July would be closest to:

Quizplus · Accepted Answer

Spending variance for direct materials = Actual cost - (Actual quantity x Budgeted price)

Actual cost = $33,820
Actual quantity = 7,780 units
Budgeted price = $4.40 per unit

Therefore, spending variance for direct materials = $33,820 - (7,780 x $4.40) = $70 U

Coderre Corporation Manufactures and Sells a Single Product