Question

Courington Detailing's cost formula for its materials and supplies is $1,960 per month plus $15 per vehicle. For the month of August, the company planned for activity of 91 vehicles, but the actual level of activity was 56 vehicles. The actual materials and supplies for the month was $2,580.

The activity variance for materials and supplies in August would be closest to:

Answer 1

$220 favorable

Step-by-step explanation:

In order to determine the activity variance for materials and supplies for the month of August,the budgeted amount needs to recalculated to reflect the actual level of activity.

What I meant by recalculating the budgeted amount is that we should recompute materials and supplies cost using budgeted prices but actual number of vehicles in the month.

Revised budgeted amount=$1960+($15*56)=$2800

But the amount incurred was $2,580

Activity variance for materials and supplies=$2800-$2580=$220 favorable