ANSWER QUICK # of units soldVC per unitFCBudgeted10 unitsActual20 units$3$110?$100Activity variance for total cost is $20 Unfavorable.Q. What is the spending variance for total costs?

Answered: # of units sold WC per unit FC budg 10…

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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ANSWER QUICK

# of units sold
VC per unit
FC
Budgeted
10 units
Actual
20 units
$3
$110
?
$100
Activity variance for total cost is $20 Unfavorable.
Q. What is the spending variance for total costs?

Expert Solution

Step 1: Activity variance and spending variance.

Activity variance is the difference between the budgeted cost and the actually incurred costs. Variance means the deviation form the expected costs. It is calculated by actual costs - budgeted costs.

Spending variance is the total of variable overhaed spending variance and fixed overhead spending variance.

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