Question

Snow White Frame Company's cost formula for its supplies cost is $1,740 per month plus $8 per frame. For the month of March, the company planned for activity of 614 frames, but the actual level of activity was 620 frames. The actual supplies cost for the month was $6,850. The activity variance for supplies cost in March would be closest to:

Answer 1

Answer:

$48 U

Explanation:

Calculation to determine what The activity variance for supplies cost in March would be closest to:

First step is to calculate the Planning supply activity cost

Planning supply activity cost = (614 × $8) +$1,740

Planning supply activity cost = 4,912+$1740

Planning supply activity cost = $6652

Second step is to calculate the Actual supply activity cost

Actual supply activity cost = (620 × $8) + $1,740

Actual supply activity cost =4960+$1,740

Actual supply activity cost =$6,700

Now let calculate the Activity variance for supplies cost using this formula

Activity variance for supplies cost = Actual activity cost – Planning activity cost

Let plug in the formula

Activity variance for supplies cost= $6,700 - $6,652

Activity variance for supplies cost= $48 Unfavorable

Therefore The activity variance for supplies cost in March would be closest to:$48 U