Asked by Jasneet Kaur Singh on Jul 16, 2024
Verified
The spending variance for "Other expenses" for October would have been closest to:
A) $400 F
B) $3,625 F
C) $400 U
D) $3,625 U
Other Expenses
Costs not directly related to the primary business activities, such as interest expense or losses from asset sales.
Spending Variance
The difference between the actual amount spent and the budgeted or forecasted amount, often analyzed for cost control purposes.
- Acquire an understanding of the spending variance concept and the process of its calculation for diverse categories such as manufacturing overhead, materials for refurbishing, additional expenses, depreciation of equipment, the expense of supplies, costs related to occupancy, salary and wages of employees, facility-related expenses, travel expenditures, electricity cost, and the cost of medical supplies.
Verified Answer
JM
Japleen Makkar
Jul 17, 2024
Final Answer :
C
Explanation :
The spending variance is the difference between the actual amount spent and the budgeted amount. If the actual amount spent is less than the budgeted amount, it is favorable and represented by the letter “F”. If the actual amount spent is more than the budgeted amount, it is unfavorable and represented by the letter “U”. Since we are looking for the spending variance for "Other expenses" for October, we need to find the difference between the actual amount spent and the budgeted amount for "Other expenses" in October. The budgeted amount for "Other expenses" in October was $4,100, and the actual amount spent was $3,700, which is $400 less than the budgeted amount. Therefore, the spending variance for "Other expenses" for October would have been $400 U, making choice C the correct answer.
Explanation : 
Learning Objectives
- Acquire an understanding of the spending variance concept and the process of its calculation for diverse categories such as manufacturing overhead, materials for refurbishing, additional expenses, depreciation of equipment, the expense of supplies, costs related to occupancy, salary and wages of employees, facility-related expenses, travel expenditures, electricity cost, and the cost of medical supplies.
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