Bade Midwifery's cost formula for its wages and salaries is $1,250 per month plus $244 per birth. For the month of October, the company planned for activity of 105 births, but the actual level of activity was 101 births. The actual wages and salaries for the month was $26,915. The activity variance for wages and salaries in October would be closest to:
A) $45 U
B) $976 F
C) $976 U
D) $45 F

Question

Quizplus · Accepted Answer

The activity variance is calculated by comparing the flexible budget based on actual activity to the flexible budget based on planned activity. The flexible budget for planned activity is $1,250 + ($244 * 105) = $26,810. The flexible budget for actual activity is $1,250 + ($244 * 101) = $25,894. The activity variance is $25,894 - $26,810 = -$916, which is $916 favorable (F) because the actual activity cost is less than the planned activity cost.

Bade Midwifery's Cost Formula for Its Wages and Salaries Is