1. What factors should be considered in determining whether to investigate a variance? 2. “The direction of a variance (favorable or unfavorable) is irrelevant in decisions regarding whether or not to...

1. What factors should be considered in determining whether to investigate a variance?

2. “The direction of a variance (favorable or unfavorable) is irrelevant in decisions regarding whether or not to investigate the variance.” Do you agree? Why or why not?

3. Sipple Furniture’s master budget for the year includes $360,000 for fixed supervisory salaries. Practical capacity, which is used to set the fixed overhead allocation rate, is 500 units per month. Supervisory salaries are expected to be incurred uniformly throughout the year. During August, the company produced 250 units, incurred production supervisory salaries of $29,000, and reported underapplied fixed overhead of $14,000 for supervisory salaries. What is Sipple Furniture’s supervisory salaries spending (budget) variance (rounded to the nearest whole dollar) for August? Is this variance favorable (F) or unfavorable (U)?