Soehl Natural Dying Corporation measures its activity in terms of skeins of yarn dyed.Last month,the budgeted level of activity was 14,100 skeins and the actual level of activity was 13,700 skeins.The company's owner budgets for dye costs,a variable cost,at $0.40 per skein.The actual dye cost last month was $4,510.In the company's flexible budget performance report for last month,what would have been the spending variance for dye costs?
A)$970 F
B)$132 F
C)$160 F
D)$1,130 F

Question

Quizplus · Accepted Answer

The spending variance for dye costs is the difference between the budgeted dye costs and the actual dye costs. The budgeted dye costs are $0.40 per skein multiplied by the budgeted level of activity of 14,100 skeins, which equals $5,640. The actual dye costs were $4,510. Therefore, the spending variance for dye costs is $5,640 - $4,510 = $1,130 F.

Soehl Natural Dying Corporation Measures Its Activity in Terms of Skeins