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18 June, 14:15

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:

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  1. 18 June, 17:32
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    Spending variance will be equal to - 729

    Explanation:

    We have given wages and salary is $2060 per month plus $442 per birth

    We have given total number of birth = 117

    So standard cost = $2060+117*$442 = $53774

    Actual wages and salary for the month is = $54500

    We have to find the spending variance

    Spending variance is given by

    Spending variance = Standard cost - actual cost = $53774 - $54500 = - 729

    So spending variance will be equal to - 729
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