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Courington Detailing's cost formula for its materials and supplies is $1,990 per month plus $4 per vehicle. For the month of August, the company planned for activity of 94 vehicles, but the actual level of activity was 54 vehicles. The actual materials and supplies for the month was $2,250.

The materials and supplies in the flexible budget for August would be closest to:

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Answer:

The materials and supplies in the flexible budget for August would be closest to: $44

Explanation:

Given that actual materials and supplies cost: $2,250.

As we know that, the flexible supplies cost  equal:

  • Actual level of activity × price per vehicle + supplies cost per month

= 54 vehicles ×$4 + $1,990

= $216 + $1,990

= $2,206

The computation of the spending variance is:

  • Actual supplies cost - flexible supplies cost

= $2,250 - $2,206

= $44

So the materials and supplies in the flexible budget for August would be closest to: $44

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