Question

A performance report shows that the planning revenue was $240,000, the flexible budget revenue was $225,000, and actual revenue was $230,000. The activity variance is $______ (enter the whole dollar amount and indicate if the variance is F or U).

A. $5,000 F
B. $5,000 U
C. $15,000 F
D. $15,000 U

Answer 1

The activity variance, calculated by subtracting the actual revenue from the flexible budget revenue, is a $5,000 unfavorable variance (U) because the actual revenue was $5,000 less than expected.

Step-by-step explanation:

The performance report provided shows that the planning revenue was $240,000, the flexible budget revenue was $225,000, and the actual revenue was $230,000. To find the activity variance, you compare the flexible budget revenue with the actual revenue. The formula is Flexible Budget Revenue - Actual Revenue = Activity Variance. In this case, the activity variance is $225,000 - $230,000, which equals a $5,000 unfavorable variance (U). This means that the actual revenue was $5,000 less than what was expected from the flexible budget.