Question

Hejl 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 is $213 per month plus $104 per job plus $23 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 March to be 22 jobs and 82 meals, but the actual activity was 27 jobs and 76 meals. The actual cost for catering supplies in March was $4,713. The spending variance for catering supplies in March would be closest to:

Answer 1

$56 (Favorable)

Step-by-step explanation:

Standard cost = Actual Quantity * Standard rate

Standard cost = Catering supplies cost + Actual number of jobs * Rate per job) + Actual number of meals * Rate per meal

Standard cost = {213 + (27 jobs * $104 per job) + (76 meals * $23 per job)

Standard cost = ($213 + $2,808) + $1,748

Standard cost = $3,021 + $1,748

Standard cost = $4,769

Spending variance = Actual cost - Standard cost

Spending variance = $4,713 - $4,769

Spending variance = $56 (Favorable)