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26 February, 19:38

Petrus Framing's cost formula for its supplies cost is $1,710 per month plus $9 per frame. For the month of March, the company planned for activity of 611 frames, but the actual level of activity was 614 frames. The actual supplies cost for the month was $7,490. The activity variance for supplies cost in March would be closest to:

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Answers (2)
  1. 26 February, 21:02
    0
    Answer: %27 U

    Explanation:

    Planing budget = 1710+9x611=7209

    Flexible budget = 1710+9x614=7236

    Activity variance = 7236-7209=$27 which is unfavorable
  2. 26 February, 22:00
    0
    The correct answer is $27 U'.

    Explanation:

    The activity variance for supplies cost in March is calculated below:

    Activity variance = Planning Budget - Flexible budget

    Activity variance = (1,710 + (9 x 611)) - (1,710 + (8 x 614))

    Activity variance = $7,209 - $7,236

    Activity variance = $27U

    The flexible budget is higher than the planning budget.

    Thus, the variance is unfavorable (U).

    Hence, the correct answer is $27 U'.
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