Kaaihue Detailing's cost formula for its materials and supplies is $2,750 per month plus $17 per vehicle. For the month of April, the company planned for activity of 95 vehicles, but the actual level of activity was 135 vehicles. The actual materials and supplies for the month was $4,850. 1. The materials and supplies in the planning budget for April would be closest to: A. $4,850 B. $5,045 C. $3,413 D. $4,365 2. The activity variance for materials and supplies in April would be closest to: A. $680 U B. $485 F C. $680 F D. $485 U 3. The spending variance for materials and supplies in April would be closest to: A. $195 F B. $485 F C. $195 U D. $485 U
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Kaaihue Detailing's cost formula for its materials and supplies is $2,750 per month plus $17 per vehicle. For the month of April, the company planned for activity of 95 vehicles, but the actual level of activity was 135 vehicles. The actual materials and supplies for the month was $4,850.
1. The materials and supplies in the planning budget for April would be closest to:
A. $4,850
B. $5,045
C. $3,413
D. $4,365
2. The activity variance for materials and supplies in April would be closest to:
A. $680 U
B. $485 F
C. $680 F
D. $485 U
3. The spending variance for materials and supplies in April would be closest to:
A. $195 F
B. $485 F
C. $195 U
D. $485 U
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