Trevorrow Corporation manufactures and sells a single product. The company uses units as the measure of...

Free

50.1K

Verified Solution

Question

Accounting

Trevorrow Corporation manufactures and sells a single product.The company uses units as the measure of activity in its budgetsand performance reports. During June, the company budgeted for5,600 units, but its actual level of activity was 5,560 units. Thecompany has provided the following data concerning the formulasused in its budgeting and its actual results for June:
Data used in budgeting:
Fixed element per month Variable element per unit
Revenue - $ 29.00
Direct labor $ 0 $ 3.60
Direct materials 0 9.70
Manufacturing overhead 38,700 1.30
Selling and administrative expenses 24,300 0.40
Total expenses $ 63,000 $ 15.00
Actual results for June:
Revenue $ 165,382
Direct labor $ 19,481
Direct materials $ 51,677
Manufacturing overhead $ 45,828
Selling and administrative expenses $ 26,554
The overall revenue and spending variance (i.e., the variancefor net operating income in the revenue and spending variancecolumn on the flexible budget performance report) for June would beclosest to:
Multiple Choice
A $6,442 F
B $6,442 U
C $7,002 F
D $7,002 U
PLEASE SHOW STEPS

Answer & Explanation Solved by verified expert

4.1 Ratings (670 Votes)

Answer- The overall revenue and spending variance (i.e., the variance for net operating income in the revenue and spending variance column on the flexible budget performance report) for June would be closest to= $7002 F (Option C).

Explanation-

TREVORROW CORPORATION
Revenue & Spending Variance
For the month ended June
Particulars		Flexible Budget	Actual Results	Variances	Remark
		$		$
Revenue	5560 units*$29 per unit	161240	165382	4142	Favorable

Less:-Expenses
Direct labor	5560 units*$3.60 per unit	20016	19481	535	Favorable
Direct materials	5560 units*$9.70 per unit	53932	51677	2255	Favorable
Manufacturing overhead	(5560 units*$1.30 per unit)+$38700	45928	45828	100	Favorable
Selling & Administrative expenses	(5560 units*$0.40 per unit)+$24300	26524	26554	-30	Unfavorable

Total Expenses		146400	143540	2860	Favorable

Net Operating Income		14840	21842	7002	Favorable

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

	Fixed element per month		Variable element per unit
Revenue		-	$	29.00

Direct labor	$	0	$	3.60
Direct materials		0		9.70
Manufacturing overhead		38,700		1.30
Selling and administrative expenses		24,300		0.40
Total expenses	$	63,000	$	15.00


Revenue	$	165,382
Direct labor	$	19,481
Direct materials	$	51,677
Manufacturing overhead	$	45,828
Selling and administrative expenses	$	26,554