Question

Petrus Framing's cost formula for its supplies cost is $1,710 per month plus $9 per frame. For the month of March, the company planned for activity of 611 frames, but the actual level of activity was 614 frames. The actual supplies cost for the month was $7,490. The activity variance for supplies cost in March would be closest to:

Answer 1

Answer: %27 U

Step-by-step explanation:

Planing budget= 1710+9x611=7209

Flexible budget = 1710+9x614=7236

Activity variance = 7236-7209=$27 which is unfavorable

Answer 2

The correct answer is $27 U'.

Step-by-step explanation:

The activity variance for supplies cost in March is calculated below:

Activity variance = Planning Budget - Flexible budget

Activity variance = (1,710 + (9 x 611)) — (1,710 + (8 x 614))

Activity variance = $7,209 — $7,236

Activity variance = $27U

The flexible budget is higher than the planning budget.

Thus, the variance is unfavorable (U).

Hence, the correct answer is $27 U'.