Asked by Diego Dulanto on May 07, 2024
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Mcdougald Corporation is a service company that measures its output by the number of customers served.The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results of operations for March. When the company prepared its planning budget at the beginning of March, it assumed that 21 customers would have been served.However, 26 customers were actually served during March. The spending variance for "Employee salaries and wages" for March would have been closest to:
A) $1,200 F
B) $3,800 F
C) $3,800 U
D) $1,200 U
Planning Budget
A budget based on the level of output planned at the start of the budgetary period.
Fixed And Variable Cost
Costs that remain constant regardless of the level of production or sales (fixed), and costs that vary directly with the level of production or sales (variable).
Spending Variance
A financial metric that compares the actual amount spent on a specific item to the budgeted or expected amount.
- Apply the comprehension of fixed and variable cost estimates to budgeting and variance analysis.
Verified Answer
Learning Objectives
- Apply the comprehension of fixed and variable cost estimates to budgeting and variance analysis.
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