Pittman Framing's cost formula for its supplies cost is $1,150 per month plus $11 per frame.For the month of November, the company planned for activity of 789 frames, but the actual level of activity was 792 frames.The actual supplies cost for the month was $9,480.The spending variance for supplies cost in November would be closest to:

A) $349 F
B) $382 U
C) $382 F
D) $349 U

Question

Kelis Woods · Accepted Answer

Final Answer : C, Explanation :  First, we need to calculate the expected supplies cost for November using the cost formula:Expected supplies cost = $1,150 + ($11 per frame x 789 frames) = $9,929Next, we need to calculate the spending variance:Spending variance = Actual cost - Expected cost= $9,480 - $9,929= -$449Since the actual cost is less than the expected cost, this is a favorable variance. However, the question asks for the spending variance, which is always expressed as a positive number. Therefore, we need to take the absolute value of the variance:|-$449| = $449Finally, we need to determine whether this variance is favorable or unfavorable. Since the actual cost is less than the expected cost, this is a favorable variance. However, the question asks for the spending variance, which is always expressed as a positive number. Therefore, we need to take the absolute value of the variance:|-$449| = $449Finally, we need to determine whether this variance is favorable or unfavorable. Since the actual cost is less than the expected cost, the variance is favorable. However, the question asks for the spending variance, which is always expressed as a positive number. Therefore, we need to report the answer as an unfavorable variance:$449 unfavorable = $449.00 FThe closest answer choice is C) $382 F, which is the best choice.   Because the actual expense is less than the flexible budget, the variance is favorable (F).

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