Fudala Snow Removal's Cost Formula for Its Vehicle Operating Cost

question 217

Multiple Choice

Fudala Snow Removal's cost formula for its vehicle operating cost is $1,480 per month plus $308 per snow-day.For the month of March,the company planned for activity of 11 snow-days,but the actual level of activity was 16 snow-days.The actual vehicle operating cost for the month was $6,130.The spending variance for vehicle operating cost in March would be closest to:

• A)$1,262 U
• B)$278 F
• C)$278 U
• D)$1,262 F

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Definitions:

Manufacturing Overhead Budget

A detailed plan that outlines the expected costs other than direct materials and direct labor that will be incurred in the manufacturing process within a specific period.

Fixed Manufacturing Overhead

The consistent, recurring costs associated with manufacturing that do not change with the level of production, such as rent, insurance, and salaries for management.

Selling and Administrative Expense Budget

A detailed projection of all selling and administrative expenses expected to be incurred by a company during a specific period.

Budgeted Sales

The projected amount of sales revenue a company anticipates earning over a specific period, based on forecasts and past data.