Courington Detailing's cost formula for its materials and supplies is $2,040 per month plus $9 per vehicle. For the month of August, the company planned for activity of 99 vehicles, but the actual level of activity was 59 vehicles. The actual materials and supplies for the month was $2,890.The spending variance for materials and supplies in August would be closest to:
A) $319 F
B) $41 F
C) $319 U
D) $41 U

Question

Quizplus · Accepted Answer

To calculate the spending variance, we need to first calculate the expected cost for August using the cost formula, and then subtract the actual cost from that.

Expected cost = $2,040 + ($9 per vehicle x 99 vehicles) = $2,931

Spending variance = Actual cost - Expected cost = $2,890 - $2,931 = $41 U

Therefore, the best choice is (D) $41 U.

Courington Detailing's Cost Formula for Its Materials and Supplies Is