Kudej Printing uses two measures of activity, press runs and book set-ups, in the cost formulas in its budgets and performance reports. The cost formula for wages and salaries is $8,360 per month plus $570 per press run plus $910 per book set-up. The company expected its activity in May to be 194 press runs and 74 book set-ups, but the actual activity was 195 press runs and 72 book set-ups. The actual cost for wages and salaries in May was $188,370.
-The spending variance for wages and salaries in May would be closest to:
A)$2,090 F
B)$3,340 U
C)$3,340 F
D)$2,090 U

Question

Quizplus · Accepted Answer

The spending variance is the difference between the actual cost and the budgeted cost. The budgeted cost is calculated using the cost formula and the expected activity levels. The actual cost is given.Budgeted cost = $8,360 + ($570 x 194) + ($910 x 74) = $185,030Spending variance = $188,370 - $185,030 = $3,340 F

Kudej Printing Uses Two Measures of Activity, Press Runs and Book