Petrus Framing's cost formula for its supplies cost is $2,300 per month plus $6 per frame. For the month of March, the company planned for activity of 861 frames, but the actual level of activity was 856 frames. The actual supplies cost for the month was $7,790. The activity variance for supplies cost in March would be closest to:

Question

Quizplus · Accepted Answer

The activity variance is calculated by comparing the flexible budget cost based on actual activity to the flexible budget cost based on planned activity. The flexible budget cost for planned activity is $2,300 + ($6 * 861) = $7,466. The flexible budget cost for actual activity is $2,300 + ($6 * 856) = $7,436. The activity variance is $7,466 - $7,436 = $30 F (Favorable).

Petrus Framing's Cost Formula for Its Supplies Cost Is $2,300