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Dermody Snow Removal's cost formula for its vehicle operating cost is $3,050 per month plus $335 per snow-day, For the month of December, the company planned for activity actual level of activity was 19 snow-days. The actual vehicle operating cost for the month was $9.03O. The spending variance for vehicle operating cost in December would be clc Multiple Cholce $285 U $285 F $385 F $385 U < Prev 21 of 36 Next e here to search 74°F Mostly

Dermody Snow Removal's cost formula for its vehicle operating cost is $3,050 per month plus $335 per snow-day, For the month of December, the company planned for activity actual level of activity was 19 snow-days. The actual vehicle operating cost for the month was $9.03O. The spending variance for vehicle operating cost in December would be clc Multiple Cholce $285 U $285 F $385 F $385 U < Prev 21 of 36 Next e here to search 74°F Mostly

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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**Problem Description:** Dermody Snow Removal's cost formula for its vehicle operating cost is $3,050 per month plus $335 per snow-day. For the month of December, the company planned for activity of 17 snow-days, but the actual level of activity was 19 snow-days. The actual vehicle operating cost for the month was $9,030. The spending variance for vehicle operating cost in December would be closest to: **Multiple Choice Options:** - \( \$285 \, U \) - \( \$285 \, F \) - \( \$385 \, F \) - \( \$385 \, U \) **Explanation:** To find the spending variance, you need to calculate the difference between the planned cost and the actual cost based on the actual level of activity. Here's how you can compute it: 1. **Planned Cost Calculation:** - Planned snow-days = 17 - Planned cost = $3,050 + (17 snow-days * $335/snow-day) 2. **Actual Cost Calculation:** - Actual snow-days = 19 - Actual cost = $3,050 + (19 snow-days * $335/snow-day) 3. **Spending Variance:** - Variance = Actual Cost - Planned Cost Calculate these to determine the variance and match it with one of the given options.
Transcribed Image Text:**Problem Description:** Dermody Snow Removal's cost formula for its vehicle operating cost is $3,050 per month plus $335 per snow-day. For the month of December, the company planned for activity of 17 snow-days, but the actual level of activity was 19 snow-days. The actual vehicle operating cost for the month was $9,030. The spending variance for vehicle operating cost in December would be closest to: **Multiple Choice Options:** - \( \$285 \, U \) - \( \$285 \, F \) - \( \$385 \, F \) - \( \$385 \, U \) **Explanation:** To find the spending variance, you need to calculate the difference between the planned cost and the actual cost based on the actual level of activity. Here's how you can compute it: 1. **Planned Cost Calculation:** - Planned snow-days = 17 - Planned cost = $3,050 + (17 snow-days * $335/snow-day) 2. **Actual Cost Calculation:** - Actual snow-days = 19 - Actual cost = $3,050 + (19 snow-days * $335/snow-day) 3. **Spending Variance:** - Variance = Actual Cost - Planned Cost Calculate these to determine the variance and match it with one of the given options.
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