Moncrief Corporation Bases Its Budgets on Machine-Hours

question 324

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

---

Definitions:

Capital Budgeting

The process of planning and evaluating investments in long-term assets to determine which projects will generate the most profitable returns.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in equal annual amounts, making the expense predictable and consistent.

Income Taxes

Taxes levied by governments on individuals' or businesses' net income, where the amount owed varies based on the level of the income earned.

Operating Cash Inflow

Cash generated from a company's primary business operations, excluding non-operational sources like investments or financing.