Question

Courington Detailing's cost formula for its materials and supplies is $2,420 per month plus $9 per vehicle. For the month of August, the company planned for activity of 63 vehicles, but the actual level of activity was 33 vehicles. The actual materials and supplies for the month was $2,840.
Required:
1. The activity variance for materials and supplies in August would be closest to ______________.

Answer 1

Answer:

$123 Unfavorable

Explanation:

Budgeted cost = $2,420 + (33 * $9) = $2,717

Actual cost = $2,840

Variance = Budgeted cost - Actual cost = $2,717 - $2,840 = $123 Unfavorable

Therefore, the activity variance for materials and supplies in August would be closest to $123 Unfavorable.