Privett Hospital bases its budgets on patient-visits. The hospital's static planning budget for November appears below:

Actual results for the month were:

-The spending variance for supplies costs in the flexible budget performance report for the month is:
A)$120 F
B)$860 U
C)$860 F
D)$120 U

Question

Privett Hospital bases its budgets on patient-visits. The hospital's static planning budget for November appears below:

Actual results for the month were:

-The spending variance for supplies costs in the flexible budget performance report for the month is:
A)$120 F 
B)$860 U 
C)$860 F 
D)$120 U

Quizplus · Accepted Answer

The spending variance is the difference between the actual cost and the budgeted cost. In this case, the actual cost is $1,000 and the budgeted cost is $140. The difference is $860, which is favorable (F) because the actual cost is less than the budgeted cost.

Privett Hospital Bases Its Budgets on Patient-Visits