JAR-499 tour company uses two measures of activity, routes and passengers in its cost formulas used for budgeting and performance evaluation. The cost formula for tour operating costs Is $56,870 per month plus $2,876 per route plus $17 per passenger The company expected in August to perform 86 routes and serve 259 passengers, but the actual activity was 95 routes and 269 passengers. The actual tour operating costs in August was $305.100. The spending variance for tour operating costs in August would be closest to: $3,509 Favorable $26,054 Favorable $29,563 Favorable $3.509 Unfavorable
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.
Subject - Acounting
JAR-499 tour company uses two measures of activity, routes and passengers in its cost formulas used for budgeting and performance evaluation. The cost formula for tour operating costs Is $56,870 per month plus $2,876 per route plus $17 per passenger The company expected in August to perform 86 routes and serve 259 passengers, but the actual activity was 95 routes and 269 passengers. The actual tour operating costs in August was $305.100. The spending variance for tour operating costs in August would be closest to:
$3,509 Favorable
$26,054 Favorable
$29,563 Favorable
$3.509 Unfavorable
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