Chapter 15 Self Study 1. Explain (briefly) the distinction between a cost, profit and investment center in a business, and provide an example. 2. Explain why a company uses static and flexible budgets. 3. Complete the following chart. Compute variances for the items shown in the following list and indicate whether each variance is favorable (F) or unfavorable (UF). Item Budget Actual Variance F or UF Selling and Administrative Expenses $ 29,000 $ 27,000 Sales Revenue $310,000 $325,000 Materials Price $2.00 per lb. $2.10 per lb. Cost of Goods Sold $125,000 $100,000 Materials Purchases $250,000 $265,000 Materials Usage 6,000 lbs. 5,800 lbs. Sales Price $550 each $500 each Labor Rate $8.10 per hour $7.95 per hour Production Volume 950 units 900 units Labor Usage $96,000 $97,000 Research and Development Expense $22,000 $25,000 4. Using any 2 data points from #3, what observation can you draw about this company?