Question

Petrus Framing's cost formula for its supplies cost is $1,720 per month plus $10 per frame. For the month of March, the company planned for activity of 612 frames, but the actual level of activity was 616 frames. The actual supplies cost for the month was $8,050. The activity variance for supplies cost in March would be closest to:

a. $210 F
b. $210 U
c. $40 F
d. $40 U

Answer 1

Option (D) is correct.

Step-by-step explanation:

Given that,

Supplies cost = $1,720 per month

For the month of March,

Company planned for activity = 612 frames

Actual level of activity = 616 frames

Activity variance = Planning budget - Flexible budget

= [(612 × 10) + 1720] - [(616 × 10) + 1720]

= $7,840 - $7,880

= 40 U