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30 August, 22:37

Teel Printing uses two measures of activity, press runs, and book set-ups, in the cost formulas in its budgets and performance reports. The cost formula for wages and salaries is $7,850 per month plus $402 per press run plus $952 per book set-up. The company expected its activity in July to be 206 press runs and 113 book set-ups, but the actual activity was 203 press runs and 112 book set-ups. The actual cost for wages and salaries in July was $196,180.

The spending variance for wages and salaries in July would be closest to

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  1. 30 August, 23:43
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    Spending variance $100 unfavorable

    Explanation:

    The spending variance is the difference between the standard cost allowed for the actual activity and the actual cost of the activity

    $

    Standard cost allowed for the actual activity

    =7,850 + (402*203) + (952*112) = 196,080

    Actual cost 196,180

    Spending variance 100 unfavorable
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