Rushton Hospital bases its budgets on patient-visits. The hospital's static planning budget for May appears below: Actual results for the month were:
-The spending variance for supplies costs in the flexible budget performance report for the month is:
A)$3,030 F
B)$2,520 U
C)$3,030 U
D)$2,520 F

Question

Rushton Hospital bases its budgets on patient-visits. The hospital's static planning budget for May appears below: Actual results for the month were: 
-The spending variance for supplies costs in the flexible budget performance report for the month is:
A)$3,030 F 
B)$2,520 U 
C)$3,030 U 
D)$2,520 F

Quizplus · Accepted Answer

A spending variance is calculated by taking the actual cost minus the expected cost (from the flexible budget). Based on the information provided, the actual cost for supplies is $21,520 and the expected cost from the flexible budget is $24,050. 
$21,520 - $24,050 = -$2,530
Since the actual cost is less than the expected cost, the variance is unfavorable or unfavorable. Therefore, the answer is B) $2,520 U (U for unfavorable).

Rushton Hospital Bases Its Budgets on Patient-Visits