Milot Corporation is an oil well service company that measures its output by the number of
wells serviced. The company has provided the following fixed and variable cost estimates
that it uses for budgeting purposes and the actual results of operations for April.
Revenue
Employee salaries and wages
Servicing materials
Other expenses
When the company prepared its
planning budget at the beginning
of April, it assumed that 32 wells
would have been serviced.
However, 29 wells were actually
serviced during April.
The spending variance for
"Other expenses" for April would
have been closest to:
$600 F
$3,124 U
O $3.124 F
$600 0
Variable Element
Fixed Element
per Month
per Well
Serviced
Actual
Total for
April
$ 3,800
$112,900
$41,400
$ 900
$69,500
$
500
$15,100
$29,600
$30,200