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14 February, 07:49

Mondo Snow Removal's cost formula for its vehicle operating cost is $1,060 per month plus $429 per snow-day. For the month of January, the company planned for activity of 11 snow-days, but the actual level of activity was 13 snow-days. The actual vehicle operating cost for the month was $6,310. The activity variance for vehicle operating cost in January would be closest to:

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  1. 14 February, 08:05
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    Activity variance = $858 unfavorable

    Explanation:

    The activity variance occurs as result of the difference between the actual level of work (activity) done and the budgeted level of work as planned.

    $

    Planned budget (1060 + (429 * 11)) = 5,779

    Flexible budget (1060 + (429 * 13) = 6,637

    Activity variance 858 unfavorable
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