Question

Pittman Framing's cost formula for its supplies cost is $1,010 per month plus $11 per frame. For the month of November, the company planned for activity of 611 frames, but the actual level of activity was 601 frames. The actual supplies cost for the month was $8,170. The spending variance for supplies cost in November would be closest to:

Answer 1

Answer:

$549 U

Explanation:

Pittman Framing's variance for supplies cost in November is $549 U. The variance will be calculated by revising the planned activity as flexed budget.

Budget = 611 frames * $11 per frame = $6,721

Flexed Budget = 601 frames * $11 per frame = 6,611

Standard cost of supplies = 6,611 + 1,010

Standard cost of supplies = $7,621

Actual cost of supplies = 8,170

Variance = Standard - Actual

Variance = $549 U