Question

Herrod Catering uses two measures of activity, jobs and meals, in the cost formulas in its budgets and performance reports. The cost formula for catering supplies is $530 per month plus $102 per job plus $33 per meal. A typical job involves serving a number of meals to guests at a corporate function or at a host's home. The company expected its activity in December to be 10 jobs and 133 meals, but the actual activity was 5 jobs and 116 meals. The actual cost for catering supplies in December was $5,350. The spending variance for catering supplies in December would be closest to: Multiple Choice $589 U $589 F Oo oo $482 U $482 F

Answer 1

1) Spending variance for catering supplies = Flexible budget-actual = (530+102*5+33*116)-5350 = 482 U

So answer is c) $482 U

2) Spending variance for plane operating cost = (58190+3072*91+14*264)-331340 = 10098 F

So answer is c) $10098 F