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27 July, 19:42

Lenci 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 5,100 units, but its actual level of activity was 5,050 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:

Fixed element per month Variable element per unit

Revenue - $ 39.60

Direct labor $ 0 $ 5.50

Direct materials 0 15.70

Manufacturing overhead 41,500 1.30

Selling and administrative expenses 22,700 0.20

Total expenses $ 64,200 $ 22.70

Actual results for May:

Revenue $ 197,810

Direct labor $ 28,565

Direct materials $ 80,265

Manufacturing overhead $ 47,905

Selling and administrative expenses $ 22,680

The revenue variance for May would be closest to:

+2
Answers (1)
  1. 27 July, 20:02
    0
    2170U

    See the explaination for the details of the answer.

    Explanation:

    Revenue variance = Actual quantity shipped * (standard price per unit - actual price per unit)

    Or

    AQ*SP - AQ*AP

    = (5050*39.60) - 197810

    = 199980 - 197810

    = 2170 Unfavourable

    An Unfavourable revenue variance because the actual revenue is less than what is anticipated.
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