Larance Detailing's Cost Formula for Its Materials and Supplies Is

question 176

Multiple Choice

Larance Detailing's cost formula for its materials and supplies is $2,230 per month plus $1 per vehicle. For the month of November, the company planned for activity of 75 vehicles, but the actual level of activity was 25 vehicles. The actual materials and supplies for the month was $2,160.
-The activity variance for materials and supplies in November would be closest to:

• A)$145 U
• B)$145 F
• C)$50 U
• D)$50 F

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Definitions:

Cash Basis

An accounting method where revenues and expenses are recognized only when cash is received or paid out.

Incurred Expenses

Costs that have been recognized or consumed in the operations of a business, regardless of the payment status.

Net Income

The total profit or loss of a company after deducting all expenses, taxes, and costs from total revenue.

Accounting Period

The span of time at the end of which the financial position of a business is calculated and reported, typically a month, quarter, or year.