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 laundry costs in the flexible budget performance report for the month is:
A)$960 F
B)$1,660 F
C)$960 U
D)$1,660 U

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 laundry costs in the flexible budget performance report for the month is:
A)$960 F 
B)$1,660 F 
C)$960 U 
D)$1,660 U

Quizplus · Accepted Answer

The spending variance is computed as actual cost incurred minus expected cost. In this case, actual cost was $9,540 and expected cost was $10,500. Therefore, the spending variance is -$960 or $960 unfavorable (i.e. more was spent than expected). So, the correct choice is C.

Rushton Hospital Bases Its Budgets on Patient-Visits