Question

Petrus Framing's cost formula for its supplies cost is $1,850 per month plus $10 per frame. For the month of March, the company planned for activity of 625 frames, but the actual level of activity was 633 frames. The actual supplies cost for the month was $8,540. The activity variance for supplies cost in March would be closest to:

Answer 1

$360

Step-by-step explanation:

Actual results $8,540

Flexible budget

[$1,850 +(10×633)]

$1,850+$6,330= $8,180

Actual result- flexible budget = $8,540-$8,180 = $360

Spending variance =$360

Because the actual expense is higher the flexible budget, therefore the variance is unfavorable (U).