Question

Bade Midwifery's cost formula for its wages and salaries is $1,230 per month plus $240 per birth. For the month of October, the company planned for activity of 105 births, but the actual level of activity was 101 births. The actual wages and salaries for the month was $26,470. The activity variance for wages and salaries in October would be closest to:

Answer 1

The activity variance for wages and salaries in October is calculated as the difference between the actual cost of $26,470 and the planned cost at the actual activity level of 101 births, which is $25,470, resulting in an activity variance of $1,000.

Step-by-step explanation:

The question is asking to calculate the activity variance for wages and salaries in October. The formula for calculating the activity variance is to take the difference between the actual cost and the planned cost at the actual level of activity. To compute the planned cost at the actual level of activity (101 births), you apply the cost formula given, which is $1,230 per month plus $240 per birth. Therefore, the planned cost for 101 births is $1,230 + ($240 × 101) = $25,470.

The actual cost is given as $26,470. The activity variance is then the actual cost minus the planned cost at the actual activity level. The calculation is $26,470 (actual cost) - $25,470 (planned cost for 101 births) = $1,000. Thus, the activity variance for wages and salaries in October would be $1,000.

Answer 2

wages and salaries activity variance= $1,000 unfavorable

Step-by-step explanation:

Giving the following information:

Standard:

Fixed= $1,230

Variable= $240 er birth

Actual:

101 births.

The actual wages and salaries for the month was $26,470.

To calculate the activity variance for wages, we need to use the following formula:

wages and salaries activity variance= (actual costs - standards costs)

standards= 1,230 + 240*101= $25,470

wages and salaries activity variance= (26,470 - 25,470)

wages and salaries activity variance= $1,000 unfavorable