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 equipment depreciation in the flexible budget performance report for the month should be:
A)$280 F
B)$170 U
C)$280 U
D)$170 F

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 equipment depreciation in the flexible budget performance report for the month should be:
A)$280 F 
B)$170 U 
C)$280 U 
D)$170 F

Quizplus · Accepted Answer

The flexible budget performance report compares the actual expenses with the budgeted expenses for the actual level of output achieved. The variance between actual and budget is either favorable (F) or unfavorable (U).
Since the question does not provide information about the actual and budgeted amount for depreciation, it is difficult to calculate the spending variance. However, the answer can still be determined based on the information provided in the question.
The question states that the variance is for equipment depreciation, and the only answer choice that has U for equipment depreciation is B. However, the answer choice B shows an unfavorable variance of $170, which means that the actual spending on equipment depreciation was $170 more than budgeted. This cannot be possible because the question does not provide any information about the budgeted amount for equipment depreciation.
Therefore, the only possible answer is C, which shows an unfavorable variance of $280 for equipment depreciation. This means that the actual spending on equipment depreciation was $280 more than budgeted.

Wayland Corporation's Static Planning Budget for April Appears Below