Asked by Dustin Hansen on Jun 10, 2024
Verified
Ramkissoon Midwifery's cost formula for its wages and salaries is $2,060 per month plus $442 per birth.For the month of July, the company planned for activity of 117 births, but the actual level of activity was 114 births.The actual wages and salaries for the month was $54,500.The spending variance for wages and salaries in July would be closest to:
A) $726 U
B) $2,052 F
C) $2,052 U
D) $726 F
Wages And Salaries
Payments made to employees for their labor or services, either hourly (wages) or fixed over a time period (salaries).
Spending Variance
The difference between the actual amount of cost incurred and the budgeted or expected amount of cost.
Births
The occurrence of an organism coming into life or existence, relevant in demographic and epidemiological studies.
- Calculate and critique variances in fiscal management, including outlays, revenues, and operating earnings disparities.
Verified Answer
Cost = $2,060 + ($442 x 114) = $53,588
Next, we need to calculate the spending variance, which is the difference between the actual wages and salaries and the budgeted cost:
Spending Variance = Actual Cost - Budgeted Cost
Spending Variance = $54,500 - $53,588
Spending Variance = $912
Since the actual cost is higher than the budgeted cost, the spending variance is unfavorable or unfavorable. The option that represents the closest amount to this answer is C, $2,052 U (unfavorable).
Learning Objectives
- Calculate and critique variances in fiscal management, including outlays, revenues, and operating earnings disparities.
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