Question

The Latiker commuter bus company uses two measures of activity, routes and commuters, in the cost formulas in its budgets and performance reports. The cost formula for bus operating costs is $56,880 per month plus $2,882 per route plus $15 per commuter. The company expected its activity in November to be 88 routes and 256 commuters, but the actual activity was 94 routes and 262 commuters. The actual cost for bus operating costs in November was $305,100. The spending variance for bus operating costs in November would be closest to:

Multiple Choice

$17,382 Favorable

$9,236 Favorable $9,236

Unfavorable $26,618 Favorable

$26,618 Unfavorable

Answer 1

Answer is - Favourable $26,618

Particulars	$
Operating cost (A)	56,880
per route cost	2,882
no. of routes	94
Total route cost (B)	270,908
per commuter cost	15
no. of commuters	262
Total commuters cost (C)	3,930
Total Budgeted Cost (A+B+C)	331,718
Total cost incurred/actual cost	305,100
Favourable vaiance	26,618