Larance Detailing's cost formula for its materials and supplies is $2,230 per month plus $1 per vehicle. For the month of November, the company planned for activity of 75 vehicles, but the actual level of activity was 25 vehicles. The actual materials and supplies for the month was $2,160.
-The activity variance for materials and supplies in November would be closest to:
A)$145 U
B)$145 F
C)$50 U
D)$50 F

Question

Quizplus · Accepted Answer

The activity variance is calculated as the difference between the flexible budget and the planning budget. The flexible budget for 25 vehicles is $2,230 + ($1 * 25) = $2,255. The planning budget for 75 vehicles is $2,230 + ($1 * 75) = $2,305. The activity variance is $2,305 - $2,255 = $50 F (Favorable).

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