Question

Petrus Framing's cost formula for its supplies cost is $1,840 per month plus $12 per frame. For the month of March, the company planned for activity of 624 frames, but the actual level of activity was 631 frames. The actual supplies cost for the month was $9,650. The activity variance for supplies cost in March would be closest to:

A. $322 U.B. $84 U.C. $84 F.

Answer 1

Option B. $84 U is the answer.

Explanation:

Petrus Framing's cost formula for its supplies cost is $1,840 per month plus $12 per frame.

Standard supplies cost for the month of March is =
`1840+(12*624)` = $9328

But the actual level of activity for the month of March = 631 frames

Therefore, supplies cost on actual frames =
`1840 +(12*631)` = $9412

The variance is =
`9412-9328`= $84 U (option B)