Questions: Pittman Framing's cost formula for its supplies cost is 1,190 per month plus 19 per frame. For the month of November, the company planned for activity of 617 frames, but the actual level of activity was 609 frames. The actual supplies cost for the month was 12,500. The spending variance for supplies cost in November would be closest to: Multiple Choice 413 U 261F 413F 261U

Solution Steps

To find the spending variance for supplies cost, we need to calculate the difference between the actual supplies cost and the flexible budget cost based on the actual level of activity. The flexible budget cost is calculated using the cost formula given, substituting the actual number of frames. The spending variance is then the actual cost minus the flexible budget cost. If the actual cost is higher, the variance is unfavorable (U), and if lower, it is favorable (F).

The flexible budget cost for supplies is calculated using the formula:

\[ \text{Flexible Budget Cost} = \text{Fixed Cost} + (\text{Variable Cost per Frame} \times \text{Actual Frames}) \]

Substituting the values:

\[ \text{Flexible Budget Cost} = 1190 + (19 \times 609) = 1190 + 11571 = 12761 \]

The spending variance is determined by the difference between the actual supplies cost and the flexible budget cost:

\[ \text{Spending Variance} = \text{Actual Supplies Cost} - \text{Flexible Budget Cost} \]

Substituting the values:

\[ \text{Spending Variance} = 12500 - 12761 = -261 \]

Since the spending variance is negative, it indicates that the actual cost was less than the flexible budget cost, which is considered favorable (F).

Final Answer