Aultz Tile Installation Corporation measures its activity in terms of square feet of tile installed.Last month, the budgeted level of activity was 1,180 square feet and the actual level of activity was 1,270 square feet.The company's owner budgets for supply costs, a variable cost, at $3.50 per square foot.The actual supply cost last month was $4,980.What would have been the spending variance for supply costs?
A)$850 U
B)$535 U
C)$353 U
D)$315 U

Question

Quizplus · Accepted Answer

Spending variance = Actual cost - Budgeted cost
Budgeted cost = Budgeted rate × Actual activity
Budgeted cost for supply = $3.50 × 1,270 = $4,445
Spending variance = $4,980 - $4,445 = $535 U (unfavorable) 11ea7998_5ca4_90d4_911b_27d67b6c6b9c_TB2627_00_TB2627_00 Because the actual expense is greater than the flexible budget, the variance is unfavorable (U).

Aultz Tile Installation Corporation Measures Its Activity in Terms of Square