Cadavieco Detailing's cost formula for its materials and supplies is $1,990 per month plus $8 per vehicle. For the month of November, the company planned for activity of 92 vehicles, but the actual level of activity was 52 vehicles. The actual materials and supplies for the month was $2,440.
-The activity variance for materials and supplies in November would be closest to:
A)$320 U
B)$286 U
C)$286 F
D)$320 F

Question

Quizplus · Accepted Answer

The formula to calculate activity variance is Actual Cost - Flexible Budget. From the table, we can see that the actual cost for materials and supplies in November is $3,920 while the flexible budget is $3,600. So, the actual cost is $320 more than the flexible budget. Therefore, the activity variance for materials and supplies in November is $320 F (F denotes favorable).

Cadavieco Detailing's Cost Formula for Its Materials and Supplies Is