Schoening 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 January.

Question
Asked Nov 7, 2019

Schoening 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 January.

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Step 1

Activity variance: Activity variance is the difference between a planned budget and flexible budget for the revenues and costs. If planned revenue is lower than flexible budget revenues, then the activity variance is favorable and vice versa. Planned costs is higher than flexible budget cost then the activity variance is favorable and vice versa.

Step 2

Compute activity variance for refurbishing material...

Activity variance for
refurbishing material
(Planned activity - Actual activity)x Cost
=(40-38)x$700
-$1400 F
Activity variance for refurbishing material is favorable as actual activity cost is lower than
planned activity cost
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Activity variance for refurbishing material (Planned activity - Actual activity)x Cost =(40-38)x$700 -$1400 F Activity variance for refurbishing material is favorable as actual activity cost is lower than planned activity cost

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Cost Analysis

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