Answer:
B. $12,040 Favorable
Explanation:
We will need to calculate first the budgeted cost for bus operating costs in November, which is given by;
C = $56,880 + $2,884* F + $14* N
Where;
F = expected number of routes in the month
N = expected number of commuters in the month
From the passage, the company expected its activity in November to be 89 routes and 256 commuters; we were also informed that the budget for the bus operating costs have been prepared before the actual costs are known.
Therefore, the budgeted cost for bus operating costs in November would be ;
= $56,880 + $2,884 × 89 + $14 × 256
= $56,880 + $256,676 + $3,584
= $317,140
The spending variance for bus operating costs in November would be;
= The actual cost for bus operating costs in November - The Budgeted cost for bus operating costs in November
= $305,100 - $317,140
= $12,040 F
