Ingrum Framing\'s cost formula for its supplies cost is $1,220 per month plus $1

Question

Ingrum Framing's cost formula for its supplies cost is $1,220 per month plus $11 per frame. For the month of June, the company planned for activity of 620 frames, but the actual level of activity was 612 frames. The actual supplies cost for the month was $7,650. The spending variance for supplies cost in June would be closest to:

$390 U

$302 U

$390 F

$302 F

Ingrum Framing's cost formula for its supplies cost is $1,220 per month plus $11 per frame. For the month of June, the company planned for activity of 620 frames, but the actual level of activity was 612 frames. The actual supplies cost for the month was $7,650. The spending variance for supplies cost in June would be closest to:

Explanation / Answer

Answer D. $302 F Spending Variance = Standard Rate X Actual Qty - Actual qty X Actual Rate Spending Variance = ($1220 + $11 X 612) - $7650 = $302 (Favourable)

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