Feemster Corporation Manufactures and Sells a Single Product

question 306

Multiple Choice

Feemster Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During October, the company budgeted for 5,900 units, but its actual level of activity was 5,850 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for October:
Data used in budgeting:
Actual results for October:

-The activity variance for net operating income in October would be closest to:

• A) $680 U
• B) $680 F
• C) $1,300 F
• D) $1,300 U

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Definitions:

Expense

Outflows or other using up of assets or incurrence of liabilities during a period from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity's ongoing major operations.

Liability

A company's legal financial debts or obligations that arise during the course of business operations.

Revenue

The total income generated by a company from its business activities, including sales of goods or services before any expenses are deducted.

Asset

An economic resource owned or controlled by an individual or company, expected to provide future benefits.