Question

Dermody Snow Removal's cost formula for its vehicle operating cost is $3,040 per month plus $334 per snow-day. For the month of December, the company planned for activity of 16 snow-days, but the actual level of activity was 18 snow-days. The actual vehicle operating cost for the month was $8,660. The spending variance for vehicle operating cost in December would be closest to:

A. 276 U

B.276 F

C.392 F

D. 392 U

Answer 1

spending variance= 392 favorable

Step-by-step explanation:

Giving the following information:

Dermody Snow Removal's cost formula for its vehicle operating cost is $3,040 per month plus $334 per snow-day. For December, the company planned for activity of 16 snow-days, but the actual level of activity was 18 snow-days. The actual vehicle operating cost for the month was $8,660.

spending variance= (standard rate - actual rate)

spending variance= [(3,040 + 334*18) - 8660]= 392 favorable