Moncrief Corporation Bases Its Budgets on Machine-Hours

question 138

Multiple Choice

Moncrief Corporation bases its budgets on machine-hours. The company's static planning budget for July appears below: Actual results for the month were:
The spending variance for power costs in the flexible budget performance report for the month should be:

• A) $2,060 F
• B) $2,060 U
• C) $300 F
• D) $300 U

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Definitions:

Accounts Receivable

Money owed to a business by its customers for goods or services delivered but not yet paid for.

Cost of Goods Sold

The direct expenses involved in producing the products a company sells, which cover both materials and labor.

Cash Cycle

The duration of time a company takes to convert its inventory and other resource inputs into cash flows from sales.

Inventory Period

The average time it takes for a company to turn its inventory into sales, often used to evaluate the efficiency of inventory management.