MacPhail Corporation Manufactures and Sells a Single Product

question 183

Multiple Choice

MacPhail Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During April, the company budgeted for 5,600 units, but its actual level of activity was 5,650 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for April:

Data used in budgeting:

Actual results for April:
-The spending variance for direct materials in April would be closest to:

• A)$3,215 U
• B)$2,260 U
• C)$2,260 F
• D)$3,215 F

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Definitions:

Non-cash Items

Expenses or incomes recorded in the income statement which do not involve actual cash flow, such as depreciation, stock-based compensation, or provisions.

Cash Flow

The overall aggregation of money movement into and out of a firm, essentially determining its ability to quickly mobilize assets.

Revenues

Revenue obtained through standard business activities, factoring in discounts and allowances for goods returned.

Earnings Per Share

Earnings per share (EPS) is a financial metric that represents the portion of a company's profit allocated to each outstanding share of common stock, serving as an indicator of a company's profitability.