Question

Mondo Snow Removal's cost formula for its vehicle operating cost is $1,980 per month plus $696 per snow-day. For the month of January, the company planned for activity of 13 snow-days, but the actual level of activity was 17 snow-days. The actual vehicle operating cost for the month was $13,430. The activity variance for vehicle operating cost in January would be closest to:

Answer 1

The activity variance for vehicle operating cost for the month of January is $2,784 U

Step-by-step explanation:

Activity Variance = Actual Activity - Standard Activity * Standard Rate

Activity Variance = Actual snow days - Standard snow days * Standard Rate

Activity Variance = (17 - 13) * $696

Activity Variance = 4 * $696

Activity Variance = $2,784 Unfavorable