Medlar Corporation's static planning budget for June appears below. The company bases its budgets on machine-hours. In June, the actual number of machine-hours was 9,300, the actual supplies cost was $19,760, the actual power cost was $35,720, the actual salaries cost was $27,130, and the actual equipment depreciation was $39,430.
The spending variance for supplies cost in the flexible budget performance report for the month should be:
A) $180 U
B) $700 U
C) $700 F
D) $180 F

Question

Medlar Corporation's static planning budget for June appears below. The company bases its budgets on machine-hours.  In June, the actual number of machine-hours was 9,300, the actual supplies cost was $19,760, the actual power cost was $35,720, the actual salaries cost was $27,130, and the actual equipment depreciation was $39,430.
The spending variance for supplies cost in the flexible budget performance report for the month should be:
A) $180 U 
B) $700 U 
C) $700 F 
D) $180 F

Quizplus · Accepted Answer

11eacbfc_c5b5_1f30_8ffe_834355a890b4_TB7552_00 Because the actual expense is less than the flexible budget, the variance is favorable (F).

Medlar Corporation's Static Planning Budget for June Appears Below