Bob’s ball bearing buffing shop requires a payment of $1,000 to even inspect a b
ID: 2571645 • Letter: B
Question
Bob’s ball bearing buffing shop requires a payment of $1,000 to even inspect a barrel of ball bearings plus $3 per ball bearing. For the month of November (a notoriously slow month for ball bearing buffing) Bob planned for 3 barrels containing 200 ball bearing, but the actual level of activity was 5 barrels containing 200 ball bearings. The actual income from November was $5,682. The activity variance for the buffing of ball bearings income would be closest to:
A. $2,900 U
B. $2,900 F
C. $1,800 U
D. $1,800 F
Explanation / Answer
Planned Income for Shop = (1000*3)+(200*3) = $3,600
Flexible Budget income = (1000*5)+(200*3) = $5,600
Activity Variance = 5600 - 3600 = $2,000 Unfavourable
The activity variance for the buffing of ball bearings income would be closest to:
C. $1,800 U