Question

Bade Midwifery's cost formula for its wages and salaries is $1,420 per month plus $246 per birth. For the month of October, the company planned for activity of 107 births, but the actual level of activity was 103 births. The actual wages and salaries for the month was $27,795. The activity variance for wages and salaries in October would be closest to:

Answer 1

Answer:

activity variance =  $984 F

Explanation:

given data

wages and salaries = $1,420 per month

per birth = $246

planned for activity = 107  births

actual level of activity = 103 births

actual wages and salaries = $27,795

to find out

activity variance for wages and salaries

solution

we know wages and salaries cost for October is

wages and salaries Planning budget  = 1420 + ( 107 × 246 )

wages and salaries Planning budget = $27742

and

Wages and salaries  Flexible budget = 1420 + ( 103 × 246 )

Wages and salaries  Flexible budget = $26758

so

activity variance = $27742 - $26758

activity variance =  $984 F