Younker Corporation is a shipping container refurbishment company that measures its output by the number of containers refurbished.The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results of operations for April. When the company prepared its planning budget at the beginning of April, it assumed that 31 containers would have been refurbished.However, 34 containers were actually refurbished during April. The spending variance for "Other expenses" for April would have been closest to:

A) $3,203 F
B) $500 F
C) $500 U
D) $3,203 U

Question

Younker Corporation is a shipping container refurbishment company that measures its output by the number of containers refurbished.The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results of operations for April.

When the company prepared its planning budget at the beginning of April, it assumed that 31 containers would have been refurbished.However, 34 containers were actually refurbished during April. The spending variance for "Other expenses" for April would have been closest to:

A) $3,203 F
B) $500 F
C) $500 U
D) $3,203 U

Vivian Kemunto · Accepted Answer

Final Answer : C, Explanation :  To calculate the spending variance for Other expenses, we need to subtract the actual amount spent on other expenses from the expected amount based on the planning budget:Expected other expenses = 31 containers * $1,160 per container + $5,250 = $40,210Actual other expenses = $40,710Spending variance = Expected other expenses - Actual other expenses= $40,210 - $40,710= $500 UTherefore, the closest answer choice is C, $500 U (under budget).

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