Lartey Corporation's cost formula for its selling and administrative expense is $22,200 per month plus $27 per unit. For the month of December, the company planned for activity of 5,300 units, but the actual level of activity was 5,270 units. The actual selling and administrative expense for the month was $168,150.
-The spending variance for selling and administrative expense in December would be closest to:
A)$3,660 F
B)$3,660 U
C)$2,850 F
D)$2,850 U

Question

Quizplus · Accepted Answer

The spending variance is calculated by subtracting the actual cost incurred from the budgeted cost. 
Spending variance = Budgeted cost - Actual cost
In this case, the budgeted cost for selling and administrative expense is $41,040 and the actual cost incurred is $37,380.

Spending variance = $41,040 - $37,380 = $3,660 U

Therefore, the closest answer is B) $3,660 U.

Lartey Corporation's Cost Formula for Its Selling and Administrative Expense