Question

Dermody Snow Removal's cost formula for its vehicle operating cost is $2,900 per month plus $320 per snow-day. For the month of December, the company planned for activity of 15 snow-days, but the actual level of activity was 13 snow-days. The actual vehicle operating cost for the month was $7,980. The spending variance for vehicle operating cost in December would be closest to:

a. $280 U
b. $280 F
c. $920 U
d. $920 F

Answer 1

$920 U

Step-by-step explanation:

Spending variance for vehicle operating cost = Flexible budget-actual

= (320*13+2900)-7980

=(4160+2900)-7980

=$920 U

Spending variance for vehicle operating cost = $920 U