Hammes Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During February, the company budgeted for 5,500 units, but its actual level of activity was 5,510 units. The company has provided the following data concerning the formulas to be used in its budgeting:

-The activity variance for direct labor in February would be closest to:
A)$1,742 F
B)$62 U
C)$62 F
D)$1,742 U

Question

Hammes Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During February, the company budgeted for 5,500 units, but its actual level of activity was 5,510 units. The company has provided the following data concerning the formulas to be used in its budgeting:

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

-The activity variance for direct labor in February would be closest to:
A)$1,742 F 
B)$62 U 
C)$62 F 
D)$1,742 U

Quizplus · Accepted Answer

The activity variance for direct labor is calculated by comparing the flexible budget to the static budget. A variance of $62 unfavorable (U) indicates that the actual labor costs were slightly higher than expected.

Hammes Corporation Manufactures and Sells a Single Product