Question

Mondo Snow Removal's cost formula for its vehicle operating cost is $1,060 per month plus $429 per snow-day. For the month of January, the company planned for activity of 11 snow-days, but the actual level of activity was 13 snow-days. The actual vehicle operating cost for the month was $6,310. The activity variance for vehicle operating cost in January would be closest to:

Answer 1

Answer:

Activity variance = $858 unfavorable

Explanation:

The activity variance occurs as result of the difference between the actual level of work (activity) done and the budgeted level of  work as planned.

                                                                  $

Planned budget (1060 + (429× 11))   = 5,779

Flexible budget (1060 + (429 ×13)   = 6,637

Activity variance                                   858  unfavorable