Aultz Tile Installation Corporation measures its activity in terms of square feet of tile installed. Last month, the budgeted level of activity was 1,180 square feet and the actual level of activity was 1,270 square feet. The company's owner budgets for supply costs, a variable cost, at $3.50 per square foot. The actual supply cost last month was $4,980. In the company's flexible budget performance report for last month, what would have been the spending variance for supply costs?
A) $850 U
B) $535 U
C) $353 U
D) $315 U

Question

Quizplus · Accepted Answer

Budgeted supply cost = $3.50/square foot x 1,180 square feet = $4,130
Actual supply cost = $4,980
Spending variance = Actual cost - Budgeted cost
= $4,980 - $4,130
= $850 unfavorable (U)
Therefore, the answer is B) $535 U, as it is the closest option.

Aultz Tile Installation Corporation Measures Its Activity in Terms of Square