Goldman uses meals served as the activity level for its fish house. The company has a...

Goldman uses meals served as the activity level for its fish house. The company has a cost formula for ingredients of $600 + $.80q. The actual cost of ingredients for June was $2,240 and the restaurant served 1,700 meals. The budget was based on serving 1,800 meals.

What is the spending variance for June?

Solutions

Expert Solution

Budgeted Cost formula = $600 + $.80 q

Hence,

For 1700 meals , q = 1700

Budgeted Cost = $600 + $.80 x 1700 = $1,960

Actual Cost = $2,240

spending variance = Budgeted Cost - Actual Cost
                                  = $1,960 - $2,240
                                  = - $280
                                  = $280 Unfavorable

Hence spending variance is $280 Unfavorable

ekkarill92 answered 1 year ago

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