Piechocki Corporation Manufactures and Sells a Single Product

question 324

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 8,200 units, but its actual level of activity was 8,250 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) $6,060 U
• B) $6,660 F
• C) $6,660 U
• D) $6,060 F

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Definitions:

Inventory Costs

The total cost associated with holding and managing inventory, including warehousing, depreciation, insurance, and potential obsolescence.

Single Sourcing

A procurement strategy where a company relies on a single supplier for a particular component or product.

Assurance of Supply

The confidence in a supplier's ability to provide consistent and continuous goods or services, meeting the buyer’s requirements.

Greater Flexibility

The enhanced ability of an organization or system to adapt to changes, adjust to new conditions, or alter operations in response to different requirements.