Sissac Catering uses two measures of activity, jobs and meals, in the cost formu
ID: 2379499 • Letter: S
Question
Sissac 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 $630 per month plus $112 per job plus $28 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 May to be 20 jobs and 129 meals, but the actual activity was 15 jobs and 134 meals. The actual cost for catering supplies in May was $5,850. The spending variance for catering supplies in May would be closest to:
Explanation / Answer
Cost eqn is 630 + 112X + 28Y where X is no of Job & Y is no of meals
SO Flexible cost = 630 + 112*15 + 28*134 = $6,062
Actual Cost = 5850
So SpendingVariance = 6062-5850 = $212F