Question

Petrus Framing's cost formula for its supplies cost is $1,940 per month plus $10 per frame. For the month of March, the company planned for activity of 634 frames, but the actual level of activity was 638 frames. The actual supplies cost for the month was $8,680. The activity variance for supplies cost in March would be closest to:

Answer 1

Activity variance $40 unfavorable

Step-by-step explanation:

The activity variance occurs as result of the difference between the actual level of work (activity) done and the budgeted level of work as planned.

Budgeted cost for the planned activity level of 634 frames

= 1,940 + (10 × 634)= $8280

Standard cost allowed for the actual activity level

= 1,940 + (10×638)

= $8,320

Activity variance = $8,320 - $8280 = $40 unfavorable