Strongheart Enterprises anticipated selling 37,000 units of a major product and paying sales commissions of $7 per unit

Management Dec 09, 2020

Strongheart Enterprises anticipated selling 37,000 units of a major product and paying sales commissions of $7 per unit. Actual sales and sales commissions totaled 37,500 units and $268,700, respectively. If the company used a flexible budget for performance evaluations, Strongheart would report a cost variance of:

Expert Solution

Computation of Cost Variance:

Cost Variance = (Actual units sold*Standard commission per unit) - Actual Cost

= (37,500*$7) - $268,700

= $262,500 - $268,700

Cost Variance = $6,200 (U)

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