In a case study, a company has a budgeted cost of goods sold of $40,000 and actu

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Question: In a case study, a company has a budgeted cost of goods sold of $40,000 and actual cost of goods sold of $45,000. What is the cost variance?

Options:

$5,000 Favorable
$5,000 Unfavorable
$0
$10,000 Unfavorable

Correct Answer: $5,000 Unfavorable

Solution:

The cost variance is calculated as Actual Cost of Goods Sold ($45,000) minus Budgeted Cost of Goods Sold ($40,000), resulting in a $5,000 unfavorable variance.

In a case study, a company has a budgeted cost of goods sold of $40,000 and actu

Practice Questions

In a case study, a company has a budgeted cost of goods sold of $40,000 and actual cost of goods sold of $45,000. What is the cost variance?

$5,000 Favorable
$5,000 Unfavorable
$0
$10,000 Unfavorable

Questions & Step-by-Step Solutions

In a case study, a company has a budgeted cost of goods sold of $40,000 and actual cost of goods sold of $45,000. What is the cost variance?

Step 1: Identify the budgeted cost of goods sold, which is $40,000.
Step 2: Identify the actual cost of goods sold, which is $45,000.
Step 3: Subtract the budgeted cost from the actual cost: $45,000 - $40,000.
Step 4: Calculate the result, which is $5,000.
Step 5: Determine if the variance is favorable or unfavorable. Since the actual cost is higher than the budgeted cost, it is an unfavorable variance.

Cost Variance Calculation – Understanding how to calculate the difference between actual and budgeted costs to determine financial performance.

In a case study, a company has a budgeted cost of goods sold of $40,000 and actu

What’s inside this PDF?

In a case study, a company has a budgeted cost of goods sold of $40,000 and actu

Practice Questions

Questions & Step-by-Step Solutions

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