Question

Photo Framing's cost formula for its supplies cost is $1,080 per month plus $18 per frame. For the month of November, the company planned for activity of 618 frames, but the actual level of activity was 608 frames. The actual supplies cost for the month was $12,550. The spending variance for supplies cost in November would be closest to:

Answer 1

$526 was the spending variance in November

Step-by-step explanation:

The spending variance in the month involves knowing the difference between actual supplies cost incurred in the month and the budgeted supplies cost based on actual activity

Budgeted supplies cost based on actual activity of 608 frames=$1080+(608*$18)

Budgeted supplies cost based on actual activity of 608 frames=$1080+$10,944=$12,024

Spending variance=$12,550-$12.024 =$526

The actual spend was $526 more than the budgeted spend based on actual activity,hence an unfavorable variance was recorded