Interspace merchandising anticipated selling 29,000 units of a major product and paying sales commissions of $6 per unit. actual sales and sales commissions totaled 31,500 units and $182,700, respectively. if the company used a static budget for performance evaluations, interstate would report a cost variance of:

a. $6,300u.
b. $6,300f.
c. $8,700u.
d. $8,700f.
e. some other amount not listed above.

Cost variance = 8,700 U

so correct option is C. $8,700 U

Explanation:

given data

selling = 29,000 units

sales commissions = $6 per unit

Actual sales = 31,500 units

sales commissions = $182,700

to find out

cost variance

solution

we know that Material quantity variance is express as

Material quantity variance =  sales commissions × (Actual sales - selling )

Material quantity variance = $6 × (31,500 - 29,000)

Material quantity variance = =$15,000 U

and  

Material price variance =  $182700 - $31500  × $6

Material price variance = $6,300 F

so

Cost variance = $15,000 U - $6,300 F

Cost variance = 8,700 U

so correct option is C. $8,700 U

hello the answer is d

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