Kimbril Catering uses two measures of activity, jobs and meals, in the cost formulas in its budgets and performance reports. The cost formula for catering supplies is $530 per month plus $91 per job plus $12 per meal. A typical job involves serving a number of meals to guests at a corporate function or at a host's home. The company expected its activity in January to be 27 jobs and 174 meals, but the actual activity was 31 jobs and 173 meals. The actual cost for catering supplies in January was $5,330. The activity variance for catering supplies in January would be closest to:
A) $255 F
B) $255 U
C) $352 F
D) $352 U

Question

Quizplus · Accepted Answer

To calculate the activity variance, we need to find the difference between the actual cost and the expected cost based on the activity level that was budgeted for.

Expected cost = $530 + ($91 x 27) + ($12 x 174) = $4,952

Actual cost = $5,330

Activity variance = Actual cost - Expected cost 
Activity variance = $5,330 - $4,978 
Activity variance = $352 U

Therefore, the activity variance for catering supplies in January is $352 U, which is closest to option D.

Kimbril Catering Uses Two Measures of Activity, Jobs and Meals