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

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

$961F

Explanation:

The formular for finding vehicle operating cost is:

Actual budget- Flexible budget

Flexible budget= 329×21+2990

= $9,899

Actual budget= $10,860

Therefore,

Vehicle operating cost= Actual budget-Flexible budget

= $10,800-$9899

= $961F

Thus, the vehicle operating cost is $961F

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