Answer:
Hence, The activity variance for cleaning equipment and supplies in September would be closest to $651 favorable.
Explanation:
For computing the activity variance, first we need to calculate the planned budget and actual budget.
The planned budget = Monthly expense + planned activity × rate per boat
= $2,780 + 47 ×$21
= $2,780 +$987
= $3,767
The actual budget = Monthly expense + actual activity × rate per boat
= $2,780 + 16 ×$21
= $2,780 +$336
= $3,116
So, the activity variance is equals to
= Flexible budget - actual budget
= $3,767 - $3,116
= $651 favorable
The actual cleaning equipment expenses should not be considered. So, it would not be taken in the computation part.
Hence, The activity variance for cleaning equipment and supplies in September would be closest to $651 favorable.
