Question

Wyzard Corporation is a shipping container refurbishment company that measures its output by the number of containers refurbished. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results of operations for February. Fixed Element per MonthVariable Element per Container RefurbishedActual Total for February Revenue $3,800$123,400 Employee salaries and wages$40,000 $1,100$73,800 Refurbishing materials $700$21,800 Other expenses$29,700 $28,800
When the company prepared its planning budget at the beginning of February, it assumed that 37 containers would have been refurbished. However, 32 containers were actually refurbished during February.
The revenue variance in the Revenue and Spending Variances column of a report comparing actual results to the flexible budget for February would have been closest to:
a. $1,800 F
b. $1,800 U
c. $17,200 U
d. $17,200 F

Answer 1

Answer:

Revenue variance    $1800  Favorable

Explanation:

Revenue variance is the difference between the actual revenue and the standard revenue from the actual units sold. It is can be determined as follows:

Revenue variance                                                            

                                                                                                $

Revenue from 32 units  (32× 3,800)                                121,600

Actual revenue                                                                   123,400

Revenue variance                                                               1800  Favorable

Revenue variance    $1800  Favorable