Question

Kara Catering uses two measures of activity, jobs and meals, in the cost formulas in its budgets and performance reports. The cost formula for catering supplies $310 per month plus $84 per job plus $17 per meal. A typical job involves serving a number of meals to guests at a corporate function or at a host's home. The company expected its activity in July to be 15 jobs and 127 meals, but the actual activity was 14 jobs and 126 meals. The actual cost for catering supplies in July was $3,620. The activity variance for catering supplies in July would be closest to:

Answer 1

Activity variance $109 favorable

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

= $310 + ( $85 × 15) + ($17×127) 3,729

Actual cost = 3,620

Activity variance 109 favorable

Activity variance $109 favorable

Answer 2

Therefore, The activity variance for catering supplies in July would be closest to 101 favorable

Step-by-step explanation:

In order to to calculate the The activity variance for catering supplies in July we would need to calculate the Budgeted Value and the Actual Value as follows:

Budgeted Value = 350 + 15 * 84 + 127 * 17 = $3,769

Actual Value = 350 + 14*84 + 126 * 17 = $3,668

Since Actual Value is less than Budgeted Value, there will be a favorable variance of 101.

Therefore, The activity variance for catering supplies in July would be closest to 101 favorable