Piechocki Corporation Manufactures and Sells a Single Product

question 404

Multiple Choice

Piechocki Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During May, the company budgeted for 5,900 units, but its actual level of activity was 5,940 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for May: Data used in budgeting:
Actual results for May:
The spending variance for direct materials in May would be closest to:

• A) $2,434 U
• B) $1,950 U
• C) $2,434 F
• D) $1,950 F

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Definitions:

Annuity

A finance option that grants a regular payment sequence to individuals, chiefly employed as income for retired persons.

Cash Flow

The complete total of funds entering and leaving a business, notably affecting its immediate financial resources.

Interest Expense

The cost incurred by an entity for borrowed funds over a period, which can appear on the income statement as a result of loans, bonds, or credit lines.

Semiannually

Pertains to an event or process that occurs twice a year.