Wayland Corporation's static planning budget for April appears below. The company bases its budgets on machine-hours. In April, the actual number of machine-hours was 6,600, the actual supplies cost was $64,040, the actual power cost was $7,070, the actual salaries cost was $88,300, and the actual equipment depreciation was $7,430.
-The spending variance for power cost in the flexible budget performance report for the month should be:
A)$570 F
B)$470 F
C)$470 U
D)$570 U

Question

Wayland Corporation's static planning budget for April appears below. The company bases its budgets on machine-hours.  In April, the actual number of machine-hours was 6,600, the actual supplies cost was $64,040, the actual power cost was $7,070, the actual salaries cost was $88,300, and the actual equipment depreciation was $7,430.
-The spending variance for power cost in the flexible budget performance report for the month should be:
A)$570 F 
B)$470 F 
C)$470 U 
D)$570 U

Quizplus · Accepted Answer

For spending variance, we compare actual costs with the flexed budget costs.

Actual costs: $9,470 
Flexed budget costs: $9,000 (fixed budget) + $500 (10% increase for 5,000 kilowatt hours) = $9,500

Therefore, the spending variance is: 
Actual costs - Flexed budget costs = $9,470 - $9,500 = $30 U

Since the question is asking for the opposite of the normal format (i.e. negative for favorable and positive for unfavorable), the answer is $30 U or $470 unfavorable.

Therefore, the correct choice is C.

Wayland Corporation's Static Planning Budget for April Appears Below