Spirer Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During September, the company budgeted for 6,700 units, but its actual level of activity was 6,750 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for September:

Data used in budgeting:

Actual results for September:

-The activity variance for direct labor in September would be closest to:
A)$360 U
B)$360 F
C)$880 F
D)$880 U

Question

Spirer Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During September, the company budgeted for 6,700 units, but its actual level of activity was 6,750 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for September:

Data used in budgeting:

Actual results for September:

-The activity variance for direct labor in September would be closest to:

Data used in budgeting:

Actual results for September:

-The activity variance for direct labor in September would be closest to:
A)$360 U 
B)$360 F 
C)$880 F 
D)$880 U

Quizplus · Accepted Answer

The activity variance for direct labor is calculated by comparing the flexible budget to the static budget. If the actual activity level is higher than the budgeted level, the variance is unfavorable (U), and if lower, it is favorable (F). Here, the variance is $360 unfavorable.

Spirer Corporation Manufactures and Sells a Single Product