Sissac Catering uses two measures of activity,jobs and meals,in the cost formulas in its budgets and performance reports.The cost formula for catering supplies is $470 per month plus $101 per job plus $24 per meal.A typical job involves serving a number of meals to guests at a corporate function or at a host's home.The company expected its activity in May to be 12 jobs and 123 meals,but the actual activity was 9 jobs and 126 meals.The actual cost for catering supplies in May was $4,240.The spending variance for catering supplies in May would be closest to:
A)$394 U
B)$394 F
C)$163 F
D)$163 U

Question

Quizplus · Accepted Answer

First, we need to calculate the expected cost of catering supplies based on the budgeted activity:
Expected cost = $470 + ($101 x 12) + ($24 x 123) = $2,962

Next, we can calculate the flexible budget for catering supplies based on the actual activity:
Flexible budget = $470 + ($101 x 9) + ($24 x 126) = $4,054

Finally, we can calculate the spending variance as the difference between actual cost and flexible budget:
Spending variance = Actual cost - Flexible budget
Spending variance = $4,240 - $4,054
Spending variance = $186 F

Therefore, the closest answer choice is C) $163 F.

Sissac Catering Uses Two Measures of Activity,jobs and Meals,in the Cost