Teel Printing uses two measures of activity, press runs and book set-ups, in the
ID: 2519174 • Letter: T
Question
Teel Printing uses two measures of activity, press runs and book set-ups, in the cost formulas in its budgets and performance reports. The cost formula for wages and salaries is $4,050 per month plus $406 per press run plus $956 per book set-up. The company expected its activity in July to be 218 press runs and 125 book set-ups, but the actual activity was 215 press runs and 124 book set-ups. The actual cost for wages and salaries in July was $210,580.
The spending variance for wages and salaries in July would be closest to:
Explanation / Answer
Because the actual expense is greater than the flexible budget, the variance is unfavorable (U).
Actual results $210,580 Flexible budget [$4,050 + ($406 × 215) + ($956 × 124)] $209,884 Spending variance $696Related Questions
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