Question

Herrod 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 $410 per month plus $101 per job plus $21 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 December to be 11 jobs and 121 meals, but the actual activity was 5 jobs and 104 meals. The actual cost for catering supplies in December was $3,250. The spending variance for catering supplies in December would be closest to:

Answer 1

Spending variance for supplies

= Actual - Flexible

= 3,250 - [410 + (101*5) + (21*104)]

= 3,250 - 3099

= 151 U

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