Question

Question 16 (4 points) Lartey Corporation's cost formula for its selling and administrative expense is $22,200 per month plus $27 per unit. For the month of December, the company planned for activity of 5,300 units, but the actual level of activity was 5,270 units. The actual selling and administrative expense for the month was $168,150. The spending variance for selling and administrative expense in December would be closest to: $3,660 F $3,660 U $2,850 F $2,850 U

Answer 1

Question 16:

The correct answer is $2,850 U.

Supporting calculations:

Spending Variance for selling and administrative expenses = Budgeted Selling and Administrative Expenses - Actual Selling and Administrative Expenses

= [({5,300 units * $27 per unit} + $22,200) - $168,150]

= [($143,100 + $22,200) - $168,150]

= $165,300 - $168,150

= $2,850 Unfavorable

When actual costs are more than the standard or budgeted costs then the result is call unfavorable as the expectation is not met but incurred more costs than the budgeted.

Therefore, the correct answer is $2,850 Unfavorable.

Note: As per Chegg guidelines, the first question should be answered so i have answered the first question, hence, please post the remaining questions separately.

Please do not give me the negative rating for not answering all the questions as i just followed the Chegg guidelines and also it is taking more time to answer each question.