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30 December, 00:30

vehicle operating cost is $2,990 per month plus $329 per snow-day. For the month of December, the company planned for activity of 23 snow-days, but the actual level of activity was 21 snow-days. The actual vehicle operating cost for the month was $10,860. The spending variance for vehicle operating cost in December would be closest to: Multiple Choice $303 U $303 F $961 U $961 F

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  1. 30 December, 00:49
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    Spending variance = $961 unfavorable

    Explanation:

    Giving the following information:

    Standard:

    Fixed = $2,990 per month

    Variable = $329 per snow-day.

    Actual:

    Snowy-days = 21

    Total cost = $10,860

    To calculate the spending variance, we need to use the following formula:

    Spending variance = actual costs - standard cost at the actual activity

    Spending variance = 10,860 - (2,990 + 21*329)

    Spending variance = $961 unfavorable
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