Shelby Boat Wash's cost formula for its cleaning equipment and supplies is $2,200 per month plus $34 per boat. For the month of September, the company planned for activity of 82 boats, but the actual level of activity was 32 boats. The actual cleaning equipment and supplies for the month was $3,340. The spending variance for cleaning equipment and supplies in September would be closest to:

Question

Quizplus · Accepted Answer

The spending variance is calculated as the difference between the actual cost and the flexible budget cost. The flexible budget cost for 32 boats is $2,200 + ($34 * 32) = $3,288. The actual cost was $3,340. The variance is $3,340 - $3,288 = $52, which is unfavorable (U) because the actual cost was higher than the budgeted cost.

Shelby Boat Wash's Cost Formula for Its Cleaning Equipment and Supplies