Question

Teel Printing uses two measures of activity, press runs, and book set-ups, in the cost formulas in its budgets and performance reports. The cost formula for wages and salaries is $7,850 per month plus $402 per press run plus $952 per book set-up. The company expected its activity in July to be 206 press runs and 113 book set-ups, but the actual activity was 203 press runs and 112 book set-ups. The actual cost for wages and salaries in July was $196,180.

The spending variance for wages and salaries in July would be closest to

Answer 1

Spending variance $100 unfavorable

Step-by-step explanation:

The spending variance is the difference between the standard cost allowed for the actual activity and the actual cost of the activity

$

Standard cost allowed for the actual activity

=7,850 + (402×203) + (952×112)= 196,080

Actual cost 196,180

Spending variance 100 unfavorable