Rogstad Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During March, the company budgeted for 6,700 units, but its actual level of activity was 6,670 units. The company has provided the following data concerning the formulas to be used in its budgeting: Fixed element per month Variable element per unitRevenue - $ 34.00Direct labor $ 0 $ 7.20Direct materials 0 12.00Manufacturing overhead 40,500 1.30Selling and administrative expenses 23,200 0.40Total expenses $63,700 $ 20.90The activity variance for selling and administrative expenses in March would be closest to:a. $12 Ub. $12 Fc. $38 Ud. $38 F

$12 F

Explanation:

Activity variance is the difference between the cost in the actual production and the budgeted production as a result of the differences in the level of activity consumed in a production process. It is favorable when a cost savings is recorded and unfavorable when more cost than budgeted is recorded

Budgeted production = 6,700

Actual production = 6,670

                                               Unit rate    Budgeted       Actual

Selling &Admin Exp.                  0.4         2,680             2,668  

Fixed Selling & Admin Exp. 23,200       23,200          23,200

Total                                                           25,880           25,868

Variance = 25880-25868 = 12 F

Note : A variance analysis is considered favorable when there is a saving in cost on the actual production.