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Dermody Snow Removal's cost formula for its vehicle operating cost is $2,850 per month plus $317 per snow-day


Dermody Snow Removal's cost formula for its vehicle operating cost is $2,850 per month plus $317 per snow-day For the month of December, the company planned for activity of 16 snow-days, but the actual level of activity was 14 snow days. The actual vehicle operating cost for the month was $7,640. The spending variance for vehicle operating cost in December would be closest to :


Multiple Choice 

  • $352 U 

  • $282 F 

  • $352 F

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Answer #1

a. $352 U

Actual results $7,640
Flexible budget [$2,850 + ($317 × 14)] $7,288
Spending variance $352

Since the actual expense is greater than the flexible budget, the variance is unfavorable (U).

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