Question

Pittman Framing's cost formula for its supplies cost is $1,240 per month plus $13 per frame. For the month of November, the company planned for activity of 622 frames, but the actual level of activity was 614 frames. The actual supplies cost for the month was $8,450. The spending variance for supplies cost in November would be closest to:

Multiple Choice

• $772 F

• $772 U

• $876 F

• $876 U

Answer 1

Correct answer---------$772 F

Working

	Units (A)	Fixed cost (B)	Variable cost per unit ©	Flexible cost and revenue (D=(A x C) +B)
Supplies	614	$ 1,240.00	$     13.00	$    9,222.00

Actual cost - Standard cost = Cost variance

8450-9222= $772 Favorable

The variance is favorable because the actual cost is lower than standard cost.