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• 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

Using the information above answer the next 5 questions

1. SWPs total budget variance for the data provided is

a. $29,400 favorable

b. $29,400 unfavorable

c. $40,600 favorable

d. $40,600 unfavorable

2- Which items in the table have favorable variances?

a. Sales and marketing expense

b. Cost of goods sold and sales

c. Sales and research and development expense

d. Sales and interest revenue

3- Which items in the table have unfavorable variances?

a. Marketing expense and cost of goods sold

b. Cost of goods sold and sales

c. Interest revenue and research and development expense

d. Interest revenue and cost of goods sold

4- 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

5- The variance for cost of goods sold could be explained by

a. Actual sales being greater than the budget

b. Actual sales being less than the budget

c. Price discounts for purchasing in bulk

d. Decreases in raw material price

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