Question

Trevorrow Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During June, the company budgeted for 6,800 units, but its actual level of activity was 6,760 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for June:

Data used in budgeting:

	Fixed element per month			Variable element per unit
Revenue		-		$	28.20
Direct labor	$	0		$	2.60
Direct materials		0			10.50
Manufacturing overhead		37,800			1.30
Selling and administrative expenses		23,400			0.40
Total expenses	$	61,200		$	14.80

Actual results for June:

Revenue	$	198,068
Direct labor	$	17,068
Direct materials	$	68,770
Manufacturing overhead	$	46,478
Selling and administrative expenses	$	26,174

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:

Multiple Choice

$9,658 U

$9,658 F

$10,194 U

$10,194 F

Answer 1

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= $10194 F.

Explanation:-

Trevorrow Corporation
Revenue & Spending Variance
For the month ended June
Particulars	Flexible Budget	Actual Results	Variances	Remark
	$		$
Revenue	6760 units*$28.20 per unit =190632	198068	7436	Favourable
Less:-Expenses
Direct labor	6760 units*$2.60 per unit =17576	17068	508	Favourable
Direct materials	6760 units*$10.50 per unit = 70980	68770	2210	Favourable
Manufacturing overhead	(6760 units*$1.30 per unit)+37800 =46588	46478	110	Favourable
Selling & Administrative expenses	(6760 units*$0.40 per unit)+23400 =26104	26174	-70	Unfavourable
Total Expenses
Net Operating Income	29384	39578	10194	Favourable