Piechocki Corporation Manufactures and Sells a Single Product

question 415

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:

Machine-Hours

A measure of the amount of time a machine is utilized during the production process, often used in cost accounting to allocate expenses.

Job-Order Costing

A costing method used to accumulate costs associated with a specific batch of products or job, allowing for detailed tracking of production expenses.

Overapplied Overhead

A situation where the allocated manufacturing overhead cost is more than the actual overhead incurred.

Manufacturing Overhead

Refers to all the indirect factory-related costs incurred from manufacturing a product that cannot be directly traced to a specific product.