Question

Taylor Midwifery's cost formula for its wages and salaries is $1,540 per month plus $497 per birth. For the month of March, the company planned for activity of 112 births, but the actual level of activity was 107 births. The actual wages and salaries for the month was $56,850. The activity variance for wages and salaries in March would be closest to:

Answer 1

Activity variance = $2485 F

Step-by-step explanation:

given data

wages and salaries = $1,540 per month

per birth = $497

activity = 112 births

actual wages and salaries = $56,850

to find out

activity variance for wages and salaries in March

solution

we get here Wages and salaries in Planning budget is here express as

Wages and salaries in Planning budget = 1540 + (497 × 112)

Wages and salaries in Planning budget = $57204 .....................1

and

Wages and salaries in Flexible budget will be here

Wages and salaries in Flexible budget = 1540 + (497 × 107)

Wages and salaries in Flexible budget = $54719 .......................2

so Activity variance will be difference of equation 1 and 2

Activity variance = $57204 - $54719

Activity variance = $2485 F