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    Variance for Budget Items

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    Compute variances for the following items and indicate whether each variance is favorable (F) or unfavorable (U).
    Item Budget Actual Variance F or U
    Sales revenue $580,000 $600,000
    Cost of goods sold $385,000 $360,000
    Material purchases at
    5,000 pounds $275,000 $280,000
    Materials usage $180,000 $178,000
    Sales price $500 $489
    Production volume 950 units 900 units
    Wages at 4,000 hours $60,000 $58,700
    Labor usage at $16
    per hour $96,000 $97,000
    Research and development
    expense $22,000 $25,000
    Selling and admin.
    expenses $49,000 $40,000

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    Solution Summary

    The solution computes various variance namely - Sales revenue, Cost of goods sold, Material purchases, Materials usage, Sales price, Production volume, Wages, Research and development expense, Selling and admin. expenses.