Assume that a portion of the spending variance for variable costs is due to the

Question

Assume that a portion of the spending variance for variable costs is due to the cost of copies (handouts) made for each student. The ?standard? allows faculty to make up to 100 copies per student at a standard cost of $0.05 per copy. During the most recent term (when 840 students were enrolled), 100,000 copies were made at an actual cost of $4,500.

Calculate the usage (efficiency) for copies (hint: use the DM price and quantity formulas). Label each variance as favorable or unfavorable.

Quantity (Usage) Variance for Copies (U or F):

Explanation / Answer

Quantity (Usage) Variance for Copies = SP(AQ-SQ) = 0.05(100,000 - 840*100) = 0.05(100,000 - 84,000) = 800 unfavorable Answer: $800 U

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