Salling Corporation Bases Its Budgets on Machine-Hours

question 39

Multiple Choice

Salling Corporation bases its budgets on machine-hours. The company's static planning budget for May appears below:
-The spending variance for power costs in the flexible budget performance report for the month should be:

• A) $310 U
• B) $310 F
• C) $820 U
• D) $820 F

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Definitions:

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operations, with cost per unit of output generally decreasing with increasing scale.

Economies of Scale

The price benefits that firms enjoy from the magnitude of their operations, where the cost of each output unit generally lessens as the scale of operations increases.

Unit Costs

The financial outlay for a company to manufacture, warehouse, and dispose of one unit of a specific item or service.

Output

Represents the total amount of goods or services produced by a firm or economy in a specific period.