Medlar Corporation's static planning budget for June appears below. The company bases its budgets on machine-hours. In June, the actual number of machine-hours was 9,300, the actual supplies cost was $19,760, the actual power cost was $35,720, the actual salaries cost was $27,130, and the actual equipment depreciation was $39,430.The spending variance for supplies cost in the flexible budget performance report for the month should be:

A) $180 U
B) $700 U
C) $700 F
D) $180 F

Question

Medlar Corporation's static planning budget for June appears below. The company bases its budgets on machine-hours.

In June, the actual number of machine-hours was 9,300, the actual supplies cost was $19,760, the actual power cost was $35,720, the actual salaries cost was $27,130, and the actual equipment depreciation was $39,430.The spending variance for supplies cost in the flexible budget performance report for the month should be:

A) $180 U
B) $700 U
C) $700 F
D) $180 F

Zybrea Knight · Accepted Answer

Final Answer : C, Explanation :  Flexible budget for supplies cost = (2 x 9,300) + $9,000 = $27,600Actual supplies cost = $19,760Spending variance = Actual - Flexible budget = $19,760 - $27,600 = $7,840 FTherefore, the spending variance for supplies cost in the flexible budget performance report for the month is $700 F. Option C is the closest answer.

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