Brayboy Tile Installation Corporation measures its activity in terms of square feet of tile installed.Last month,the budgeted level of activity was 1,360 square feet and the actual level of activity was 1,300 square feet.The company's owner budgets for supply costs,a variable cost,at $3.90 per square foot.The actual supply cost last month was $4,300.In the company's flexible budget performance report for last month,what would have been the spending variance for supply costs?
A)$770 F
B)$1,004 F
C)$198 F
D)$234 F

Question

Quizplus · Accepted Answer

The spending variance for supply costs is calculated as the difference between the actual supply costs and the budgeted supply costs. The budgeted supply costs are calculated as the budgeted level of activity multiplied by the budgeted supply cost per square foot. The actual supply costs are given as $4,300. The budgeted level of activity is 1,360 square feet and the budgeted supply cost per square foot is $3.90. Therefore, the budgeted supply costs are 1,360 square feet * $3.90 per square foot = $5,304. The spending variance for supply costs is $4,300 - $5,304 = -$1,004. The negative sign indicates that the actual supply costs were less than the budgeted supply costs.

Brayboy Tile Installation Corporation Measures Its Activity in Terms of Square