Herrod Catering uses two measures of activity jobs and meals

Herrod 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 $570 per month plus $98 per job plus $24 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 December to be 11 jobs and 98 meals, but the actual activity was 14 jobs and 102 meals. The actual cost for catering supplies in December was $4,500. The spending variance for catering supplies in December would be closest to: Multiple Choice $110 U $500 U $110 F $500 F

Solution

A. $110 U

Because the actual expense is more than the flexible budget, the variance is unfavorable (U).

Flexible budget[$570 + ($98 × 14) + ($24 × 102)]	$4,390
Actual results	$4,500
Spending variance	$110