Question

Petrus Framing's cost formula for its supplies cost is $1,730 per month plus $11 per frame. For the month of March, the company planned for activity of 613 frames, but the actual level of activity was 618 frames. The actual supplies cost for the month was $8,670. The activity variance for supplies cost in March would be closest to: Multiple Choice $55 F $55 U $197 U $197 F

Answer 1

-$55 U

Explanation:

For computation of activity variance for supplies cost in March first we need to find the budgeted activity of standard supplies cost and actual activity of standard supplies cost is shown below:-

Budgeted activity of standard supplies cost = Supplies cost + Per frame cost × budgeted Activity frames

= $1,730 + $11 × 613

= $1,730 + $6,743

= $8,473

Actual activity of Standard supplies cost = Supplies cost + Per frame cost × Actual activity frames

= $1,730 + $11 × 618

= $1,730 + $6,798

= $8,528

So, activity variance for supplies cost = Budgeted activity of standard supplied cost - Actual activity of Standard supplies cost

= $8,473 - $8,528

= -$55