Questions: Bade Midwifery's cost formula for its wages and salaries is 1,420 per month plus 246 per birth. For the month of October, the company planned for activity of 107 births, but the actual level of activity was 103 births. The actual wages and salaries for the month was 27,795. The activity variance for wages and salaries in October would be closest to:

Solution Steps

To find the activity variance for wages and salaries, we first need to calculate the expected wages and salaries based on the actual number of births. Then, we compare this expected cost to the actual wages and salaries to find the variance. The formula for expected wages and salaries is the fixed cost plus the variable cost per birth multiplied by the number of actual births.

The expected wages and salaries can be calculated using the formula: \[ \text{Expected Wages and Salaries} = \text{Fixed Cost} + (\text{Variable Cost per Birth} \times \text{Actual Births}) \] Substituting the given values: \[ \text{Expected Wages and Salaries} = 1420 + (246 \times 103) = 1420 + 25338 = 26758 \]

The activity variance is determined by subtracting the expected wages and salaries from the actual wages and salaries: \[ \text{Activity Variance} = \text{Actual Wages and Salaries} - \text{Expected Wages and Salaries} \] Substituting the values: \[ \text{Activity Variance} = 27795 - 26758 = 1037 \]

Final Answer