Question

Wexell Framing's cost formula for its supplies cost is $1,230 per month plus $10 per frame. For the month of October, the company planned for activity toward 592 frames, but the actual level of activity was 597 frames. The actual supplies cost for the month was $7,050. The activity variance for supplies cost in October would be closest to

Answer 1

Answer:

Activity variance= $150 favorable

Explanation:

Giving the following information:

Standard:

Fixed costs= $1,230

Variable cost per unit= $10

Actual:

The actual level of activity was 597 frames.

The actual supplies cost for the month was $7,050.

To calculate the activity variance, we need to use the following formula:

Activity variance= actual costs - standard cost*actual activity

Standard costs= 1,230 + 10*597= 7,200

Activity variance= 7,050 - 7,200

Activity variance= $150 favorable