Answer:
$130,000 decrease
Explanation:
Multiple Choice $57,000 decrease $130,000 decrease $54,000 decrease $187,000 increase $187,000 decrease
Calculation of Financial advantage / Disadvantage
Decrease in contribution margin $187,000
(1,047,000-860,000)
Decrease in fixed expenses $57,000
(190000*30%)
Decrease in Net Operating Income $130,000 (Financial disadvantage)
In January, Gamma Company sold 2,000 units of its product at a price of $20 per unit. Its COGS (cost of goods sold) for January totaled $20,000, and its SG&A (selling, general and administrative) costs totaled $16,000. If Gamma Company is expecting to sell 2,200 units in February, how much is the expected profit for February? (assume that the sales price will not change, and that 2,200 units is in the relevant range
Answer:
The expected profit for February is $6,000
Explanation:
It is assumed that the COGS is the variable cost and SG&A is the fixed cost.
First we need to determine the sale value of February
Sales = Selling Price x Number of Units sold = $20 per unit x 2,200 = $44,000
Now Calculate the COGS
COGS = Numbers of units sold x COGS per unit = 2,200 units x $20,000 / 2,000 = $22,000
As the SG&A is assumed to be a fixed cost, so it will remains the same.
Now calculate the Expected Profit for February
Profit = Sales - COGS - SG&A = $44,000 - $22,000 - $16,000 = $6,000
Beth, an American citizen, travels to Italy on vacation and buys an espresso machine to bring home. Her purchase increases:_____
a. Italy's GDP
b. Italy's GDP and U.S. GDP, since Beth spent dollars buying the machine.
c. U.S. GDP since she will have the machine with her at home in the U.S.
d. Neither U.S. nor Italy's GDP, since the product was bought in one country and used in another.
Answer:
Italy's GDP
Explanation:
Gross Domestic Product (GDP) is defined as the market value of all final goods and services produced in a country during a period of time e.g one year. It help analyze the quality of life - living standards and measure economic growth. Traveling to another country and purchasing thetheirur product or product there is increasing that country's GDP.
On January 1, 2010, Water Wonderland issues $20 million of 8% bonds, due in ten years, with interest payable semi-annually on June 30 and December 31 each year. 1. If the market rate is 7%, will the bonds issue at face amount, a discount, or a premium
Answer:
the bonds will trade at a Premium
Explanation:
When the Yield to Maturity (YTM) is less than the Coupon Rate, the price of the Bond will be greater than the par value and we say that the Bond is trading at a Premium.
The Yield to Maturity of 7% is less than the Coupon rate 8% hence the bond will trade at a Premium.
Calculation of the Price of Bond
Alternatively we can calculate the price of the Bond a see for ourselves as follows :
FV = $20,000,000
PMT = ($20,000,000 × 8%) ÷ 2 = $8,00,000
P/YR = 2
YTM = 7 %
N = 10 × 2 = 20
PV = ?
Using a Financial calculator to input the values as above we can calculate the Price of Bond (PV) as $21,421,240.
What is the Net Present Value of the following cash flow streams at an interest rate of 8.25%: at year : sor year 1: $75 year 2: $225; year 3: S0 and year 4 $300,
Answer:
the net present value is $480
Explanation:
The computation of the net present value is shown below
Year Cash flows discount rate Present value
0 -$0 1 -$0
1 $75 0.924 $69
2 $225 0.853 $192
3 $0 0.788 $0
4 $300 0.728 $218
Net present value $480
hence, the net present value is $480
Your grandfather wants to determine the value of his bond portfolio and asks you for help. Find the current market values of the components of your grandfather’s portfolio. (a) 80 bonds with a $1,000 face value and a coupon rate of 7.6%/year. These bonds have 11 years left to maturity and pay coupons on a semi‐annual basis. The YTM of these bonds is 8.8%/year. What is the total market value of these 80 bonds? (3 pts.) (b) 160 zero‐coupon bonds with a $1,000 face value, 9 years to maturity, and a YTM of 7.7%/year
Answer:
a) $73,320.80
b) $82,068.80
Explanation:
Current market value of bonds:
PV of face value = $1,000 / (1 + 4.4%)²² = $387.78
PV of coupon payments = $38 x 13.91402(PV annuity factor, 4.4%, 22 periods) = $528.73
Market price = $916.51
$916.51 x 80 = $73,320.80
Current market value of zero coupon bonds:
PV of face value = $1,000 / (1 + 7.7%)⁹ = $512.93
$512.93 x 160 = $82,068.80
Uvaqil353 is a division of a large corporation. Last year the division had total sales of $20,660,000, net operating income of $1,888,760, and average operating assets of $7,100,000. (ID#77728) Q) What is the Uvaqil353's turnover (closest to)?
Answer:
2.91
Explanation:
Turnover = Total sales / Average operating assets
Turnover = $20,660,000 / $7,100,000
Turnover = 2.909859154929577
Turnover = 2.91
So therefore, Uvaqil353's turnover is closest to 2.91
The following selected amounts are reported on the year-end unadjusted trial balance report for a company that uses the percent of sales method to determine its bad debts expense. Accounts receivable $ 445,000 Debit Allowance for Doubtful Accounts 1,350 Debit Net Sales 2,200,000 Credit All sales are made on credit. Based on past experience, the company estimates 2.0% of credit sales to be uncollectible. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?
Answer:
Debit Bad Debts Expense $44,000; Credit Allowance for Doubtful Accounts $44,000.
Explanation:
Bad debt Expenses = Sales * Uncollectible rate
= $2,200,000*2.0%
= $44,000
Date Account Titles and Explanation Debit Credit
Bad debt expenses $44,000
Allowances for doubtful accounts $44,000
(To record bad debt expenses)
How does simple interest differ from compound interest?
You earn simple interest in a savings account and compound interest on an investment.
Simple interest rates are between 1-5% while compound interest rates are over 5%.
Simple interest is calculated on the principal as well as the interest you’ve already earned; compound interest is calculated on principal alone.
Simple interest is calculated on principal alone; compound interest is calculated on the principal as well as the interest you’ve already earned.
Answer:
Simple interest is calculated on principal alone; compound interest is calculated on the principal as well as the interest you’ve already earned.
Explanation:
Simple interest remains a constant amount throughout the life of the loan or deposit. The amount does not change because it is calculated based on the principal amount only. As long as the principal amount is unchanged, the simple interest amount will remain the same.
Compounding refers to the adding of interest earned to the principal amount. At the end of a financial period, the interest earned is added to the principal. In the next period, the principal amount will be higher due to the interest earned added. An increase in the principal amount results in higher interest earnings.
Cougar Athletics is soliciting bids on a 3-year contract to produce 5,000 t-shirts per year to be given away at athletic events. You have decided to bid on the contract. It will cost you $4 per shirt in variable costs (buying plain t-shirts and paying an employee to imprint them) and $8,000 per year in fixed costs. A t-shirt printing machine will cost $17,500. The machine will be depreciated to zero over its 3-year life and it will not have any salvage value. There are no net working capital implications for the project. If your tax rate is 21% and your required return on this project is 12%, how much would you bid for the contract? State your answer as the annual sales amount (to 2 decimal places, $XX,XXX.XX), not the per-unit price. Write up your solutions by hand and email them to me after the exam (do NOT send a spreadsheet).
Answer:
$7.1345 per shirt
Explanation:
depreciation expense per year = $17,500 / 3 = $5,833
initial outlay = -$17,500
cash flow year 1 = [(5,000X - $20,000 - $8,000 - $5,833.33) x 0.79] + $5,833.33 = 3,950X - $20,895
cash flow year 2 = [(5,000X - $20,000 - $8,000 - $5,833.33) x 0.79] + $5,833.33 = 3,950X - $20,895
cash flow year 3 = [(5,000X - $20,000 - $8,000 - $5,833.33) x 0.79] + $5,833.33 = 3,950X - $20,895
$17,500 = (3,950X - $20,895)/1.12 + (3,950X - $20,895)/1.12² + (3,950X - $20,895)/1.12³
$17,500 = 3,526.79X - $18,656.25 + 3,148.92X - $16,657.37 + 2,811.53X - $14,872.65
$17,500 = 9,487.24X - $50,186.27
$67,686.27 = 9,487.24X
X = $67,686.27 / 9,487.24 = $7.1345 per shirt
On September 1, 2019, Parker, Inc. made a loan to one of its customers. The customer signed an 8-month note for $105,000 at 14%. Calculate the maturity value of the note. (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)
Answer:Maturity value =$115,000
Explanation:
Maturity value is the amount that includes the principal and accrued interest that a borrower should pay on its maturity date.
Maturity value of note = Principal + interest accrued
Interest = Principal x rate x time
=$105,000 x 14% X 8/12
=$9,800
Maturity value = $105,000 + 9,800
=$114,800
rounding up to the nearest dollar≈$115,000
Information $6,000 coffee equipment - 5 year expected useful life (it depreciates 1/60 every month) Adjusting entries for the month end for a $6,000 coffee equipment. What is the entry for depreciate expense?
a. $60 depreciate expense - debit
b. $60 depreciate expense - credit
c. $100 depreciate expense - debit
e. $100 depreciate expense - credit
Answer:
c. $100 depreciate expense - debit
Explanation:
Depreciation Expenses Per Month = 1/60*6000
Depreciation Expenses Per Month = $100/month
Adjustment Entry
Account Title Debit Credit
Depreciation expenses $100
Accumulated Depreciation $100
Consider the AD/AS framework seen in lectures. Say that, given the recent data on jobs added to the economy, firms feel confident that the economy will improve, and as a result investment in the economy increases. Compared to the initial equilibrium, in the long run equilibrium Prices fall, the nominal interest rate rises. None of the other answers. Prices rise, the nominal interest rate falls. Prices and the nominal interest rate fall. Prices and the nominal interest rate rise.
Answer:
Price fall , the nominal interest rate rises.
Explanation:
Since in the short run, the effect of these investment is that price level increase and nominal interest fall due to increase in the money supply and there is a increase in the real output but when the economy self correct in long run, the price level will fall and nominal interest rate rises to its original equilibrium level.
As a result of the investment in the country increasing, the result will be Prices fall, the nominal interest rate rises.
Why would this be the result?As a result of there being more investment, there will be more production of goods and services. This increase in supply of goods will lead to a fall in price.
The increase in investment will also mean that more loans are being taken by people which will increase the interest rate because loans are being demanded more.
Find out more on increases in interest rate at https://brainly.com/question/26521559.
A stock is expected to pay dividends of $1.20 per share in Year 1 and $1.35 per share in Year 2. After that, the dividend is expected to increase by 2.5% annually. What is the current value of the stock at a discount rate of 14.5%
Answer:
$10.8734
Explanation:
The computation of the current value of the stock is shown below:
D1 = $1.20
D2 = $1.35
D3 = 1.35 × 1.025 = 1.38375
g = 2.5% = 0.025
Now as we know that
P2 = D3 ÷ (r - g)
where,
Price in year 2 = P2 = $1.38375 ÷ (0.145 - 0.025)
= $11.53125
So Current Price is
= $1.20 ÷ 1.145 + $1.35 ÷ 1.145^2 + $11.53125 ÷ 1.145^2
= $10.8734
Oriole Company purchased a truck at the beginning of 2020 for $109400. The truck is estimated to have a salvage value of $4300 and a useful life of 120000 miles. It was driven 18000 miles in 2020 and 26000 miles in 2021. What is the depreciation expense for 2021
Answer:
Annual depreciation 2021= $22,771.67
Explanation:
Giving the following information:
Purchase price= $109,400
Salvage value= $4,300
Useful life in miles= 120,000
It was driven 26,000 miles in 2021.
To calculate the depreciation expense, we need to use the units-of-activity method of depreciation:
Annual depreciation= [(original cost - salvage value)/useful life of production in miles]*miles drive
2021:
Annual depreciation= [(109,400 - 4,300) / 120,000]*26,000
Annual depreciation= $22,771.67
Jim drops his car off at ABC Garage to have his exhaust system repaired and takes the train to work. When he returns, he finds that his car has been vandalized. Jim has comprehensive coverage, but feels the garage is responsible for the damage since Jim entrusted the car to ABC Garage. Which coverage type under ABC's garagekeepers policy would split the cost of the loss with Jim's own insurer without placing blame on ABC Garage
Answer: Direct Excess Coverage
Explanation:
The coverage type under ABC's garagekeepers policy that would split the cost of the loss with Jim's own insurer without placing blame on ABC Garage is the direct excess coverage.
This coverage is identical to the direct primary coverage and it basically protects the vehicle of a client without taking into consideration the person that is responsible. The direct excess coverage will be paid in excess of the primary policy.
Concord has the following inventory information. July 1 Beginning Inventory 30 units at $15 $450 7 Purchases 90 units at $23 2070 22 Purchases 10 units at $20 200 $2720 A physical count of merchandise inventory on July 31 reveals that there are 30 units on hand. Using the FIFO inventory method, the amount allocated to cost of goods sold for July is
Answer:
COGS= $2,060
Explanation:
Giving the following information:
July 1: Beginning Inventory 30 units at $15 $450
July 7: Purchases 90 units at $23 2070
July 22: Purchases 10 units at $20 200
Ending inventory in units0 30 units
First, we need to calculate the number of units sold:
Units sold= total units - ending inventory in units
Units sold= 130 - 30
Units sold= 100
Now, to calculate the cost of goods sold under the FIFO (first-in, first-out), we need to use the cost of the firsts units incorporated into inventory:
COGS= 30*15 + 70*23
COGS= $2,060
Keyser Materials has 8 percent coupon bonds on the market with 19 years to maturity. The bonds make semiannual payments and currently sell for 102 percent of par. What is the current yield
Answer: 1020
Explanation:
The following information can be gotten from the question:
Face value of bond = 1000
Coupon = 8%
Therefore, PMT = 8% × 1000/2 = 40
Years to maturity = 19
Since semiannual payments are made,
Nper = 19 × 2 = 38
Current price = PV
= 102% × 1000
= 1.02 × 1000
= 1020
1. Current Yield = Coupon/Current prce
= (2*40)/1020 = 7.84%
Uniform Supply accepted a $8,400, 90-day, 8% note from Tracy Janitorial on October 17. What entry should Uniform Supply make on January 15 of the next year when the note is paid
Answer:
Cash $8,568, credit Interest Revenue $28, credt Interest Receivable $140, credit Notes Receivable $8.400
Explanation:
The journal entry in the case when the note is paid is as follows:
Cash $8,568
To Interest revenue $28 ($8,400 × 8% × 15 ÷ 360)
To Interest receivable $140 ($8,400 × 8% × 75 ÷ 360)
To Notes receivable $8,400
(To record the note receivable)
Here the cash is debited as it increased the assets while on the other hand the interest revenue, interest receivable and note receivable is credited as it increased the revenue and decreased the assets
On September 1, 2015, Vernon Corporation acquired Barlow Enterprises for a cash payment of $850,000. At the time of purchases, Barlow's balance sheet showed assets of $620,000, liabilities of $240,000, and owner's equity of $420,000. The fair value of Barlow's assets is estimated to be $970,000. Compute the amount of goodwill acquired by Vernon.
Answer:
goodwill = $120,000
Explanation:
the basic formula used to calculate the goodwill of an acquisition is:
goodwill = total consideration paid - fair value of net assets
total consideration paid = $850,000fair value of net assets = fair value of assets - fair value of liabilities = $970,000 - $240,000 = $730,000goodwill = $850,000 - $730,000 = $120,000
The management of London Corporation is considering the purchase of a new machine costing $750,000. The company's desired rate of return is 6%. The present value factors for $1 at compound interest of 6% for 1 through 5 years are 0.943, 0.890, 0.840, 0.792, and 0.747, respectively. In addition to this information, use the following data in determining the acceptability in this situation:Year Income fromOperations Net Cash Flow1 $37,500 $187,500 2 37,500 187,500 3 37,500 187,500 4 37,500 187,500 5 37,500 187,500 The average rate of return for this investment is:____________a.10%.b. 25%.c.15%.d. 5%.
Answer:
London Corporation
The average rate of return for this investment is:____________
b. 25%.
Explanation:
a) Data and Calculations:
Cost of new machine = $750,000
Desired rate of return = 6%
Present value factors:
1 0.943,
2 0.890,
3 0.840,
4 0.792,
5 0.747
Year Income from Operations Net Cash Flow
1 $37,500 $187,500
2 37,500 187,500
3 37,500 187,500
4 37,500 187,500
5 37,500 187,500
Total $187,500 $937,500
The average rate of return for this investment is the total profit divided by total investment, multiplied by 100.
= $187,500/$750,000 * 100
= 25%
A pizza monopolist employing third-degree price discrimination charges students $10 per pizza and everyone else $15 per pizza Students must show the ID before they can get the discount The marginal cost of this monopolist is $5 whether or not the customer is a student. The price elasticity of demand for the students is
Answer:
The price elasticity of demand for the students is:
inelastic.
Explanation:
The price elasticity of demand for the students is inelastic because there is no change in the quantity demanded by students that changes the price at which pizza is sold to the students. If one student buys the pizza, the price charged remains $10 and if 1,000 students buy the pizza, the price remains $10 per unit. Therefore, students' demand for the pizza is said to be static irrespective of price because the price is fixed.
Consider the following two stocks, A and B. Stock A has an expected return of 10% and a beta of 1.20. Stock B has an expected return of 14% and a beta of 1.80. The expected market rate of return is 9% and the risk-free rate is 5%. Which security would be considered a good buy?
Answer: Stock B
Explanation:
Use CAPM to calculate the required returns of both stocks.
Stock A
Required return = Risk free rate + beta * ( Market return - risk free rate)
= 5% + 1.20 * (9% - 5%)
= 9.8%
Stock B
Required return = 5% + 1.8 * (9% - 5%)
= 12.2%
Both of them have Expected returns that are higher than their Required returns so both of them are good buys.
The better buy would be the one that has more expected value excess over required return.
Stock A excess = 10% - 9.8% = 0.2%
Stock B excess = 14% - 12.2% = 1.8%
Stock B offers a higher excess and is the better buy.
Fallow Corporation has two separate profit centers. The following information is available for the most recent year: West Division East Division Sales (net) $270,000 $420,000 Salary expense 33,000 47,000 Cost of goods sold 101,000 203,000 The West Division occupies 6,750 square feet in the plant. The East Division occupies 4,050 square feet. Rent, which was $ 54,000 for the year, is an indirect expense and is allocated based on square footage. Compute operating income for the West Division.
Answer:
$102,250
Explanation:
Sales $270,000
Less: Cost of goods sold $101,000
Gross profit $169,000
Less: Salary Expenses $33,000
Profit before New exp $138,000
Less: Rent expenses $33,750
Net profit $102,250
Workings
Rent expenses = $54,000 * 6750/6750+4050
Rent expenses = $54,000 * 6750/10800
Rent expenses = $54,000 * 0.625
Rent expenses = $33,750
One of the consequences of the U.S. trade deficit is that Multiple Choice domestic inflation has resulted. the accumulation of American dollars in foreign hands has enabled foreign firms to build factories in America. the distribution of income in the United States has become less unequal. the system of flexible exchange rates has been abandoned in favor of a new gold standard
Answer: the accumulation of American dollars in foreign hands has enabled foreign firms to build factories in America.
Explanation:
Trade deficit is a situation whereby the expenses incurred is more than the revenue gotten.
One of the consequences of the U.S. trade deficit is that the accumulation of American dollars in foreign hands has enabled foreign firms to build factories in America.
Today, the spot price of the EUR/USD exchange rate is $1.0796. The bid and ask quotes for the six-month EUR/USD forward contracts are, respectively, 73.56 and 75.68. Recall that quotes are reported in basis points, which is the common practice in FX market. According to the interest rate parity, what is the implied foreign interest rate differential
Answer:
b. 13.63%
Explanation:
Multiple choice "(a) 1.01% (b) 1.37% (c) 0.50% (d) -0.50%"
Spot rate = future rate /(1 + interest rate differential)
1.0796 = (1.0796 + 0.007356)/(1 + interest rate differential)
1.0796 = 1.086956 / (1 + interest rate differential)
1.0796 * (1 + interest rate differential) = 1.086956
(1 + interest rate differential) = 1.086956/1.0796
(1 + interest rate differential) = 1.006813634679511
Interest rate differential = 1.006813634679511 - 1
Interest rate differential = 0.006813634679511
interest rate differential = 0.006813634679511*2
interest rate differential = 0.013627269359022
interest rate differential = 13.63%
So, the difference between interest rate of Europe and US is 13.63%.
Impairment--Jessica Fullem Corp. was determining whether to write off some equipment. The equipment has a cost of $900,000 with depreciation to date of $400,000 as of December 31, 2020. On December 31, management projected the future net cash flows from this equipment to be $300,000 and the fair value to be $330,000. the company intends to use this equipment in the future, Determine if there is a loss on impairment and how much.
Answer:
-$170,000
Explanation:
Cost of equipment = $900,000
Accumulated dep = $400,000
Book value = Cost - Accumulated dep = 900,000 - 400,000 = 500,000
Future net cash flow from equipment = 300,000
Fair value of equipment= 330,000
Recoverable amount = Higher of value in use / Fair value
Recoverable amount = Higher of 300,000 or 330,000
Recoverable amount = $330,000
Impairment loss = Recoverable amount - Book value (as Recoverable amount is lower than book value)
Impairment loss = 330,000 - 500,000
Impairment loss = -$170,000
A telephone company is considering building a new automated switching distribution substation with a useful life of 20 years to support new suburban developments. The substation is located in a state in which the combined tax rate is 40%, and the telephone company uses a 15% real interest MARR to assess capital investment projects. Estimated real dollar revenues and costs are as follows:Category Amount Building initial cost $1,157,000 Building salvage cost $250,000 Equipment initial cost $775,000 Equipment cost year 2 $150,000 Equipment salvage value $36,500 Annual revenues $650,000 year 1Revenue arithmetic gradient $20,000 year 2 to 5Annual revenues $750,000 year 6 to 20Annual operating expenses $185,000 first 10 years $230,000 year 11 to 15 $275,000 year 16 to 20The substation will be put into service on the first day of the telephone company’s fiscal year. Using MACRS depreciation, what will be the telephone company’s after tax equivalent uniform annual worth for the substation?
Answer: you jhuu uhuh nbu
Explanation:
Northern Wood Products is an all-equity firm with 16,300 shares of stock outstanding and a total market value of $354,000. Based on its current capital structure, the firm is expected to have earnings before interest and taxes of $27,000 if the economy is normal, $14,800 if the economy is in a recession, and $39,200 if the economy booms. Ignore taxes. Management is considering issuing $88,600 of debt with an interest rate of 8 percent. If the firm issues the debt, the proceeds will be used to repurchase stock. What will the earnings per share be if the debt is issued and the economy is in a recession
Answer:
$0.63
Explanation:
Calculation for What will the earnings per share be if the debt is issued and the economy is in a recession
First step is to calculate the Shares repurchased
Shares repurchased=$88,600/($354,000/16,300)
Shares repurchased=$88,600/21.7
Shares repurchased = 4,083 shares
Second step is to calculate the Shares outstanding
Shares outstanding = 16,300 - 4,083
Shares outstanding= 12,217shares
Last step is to calculate earnings per share recession
Earnings per share Recession= [$14,800 - ($88,600 × 0.08)]/12,217
Earnings per share Recession= ($14,800 - $7,088)/12,217
Earnings per share Recession=$7,712/12,217
Earnings per share Recession=0.63
Therefore what the earnings per share will be if the debt is issued and the economy is in a recession is 0.63
Consider the following information on returns and probabilities: Invest 1/2 of your money in Asset A and 1/2 in Asset B. State Probability A B Boom .25 12% 4% Bust .75 6% 18% What is the expected return for the portfolio
Answer: 11%
Explanation:
Find the expected return in both Booms and Busts;
0.5 of your money is in Asset A and Asset B each.
Boom;
= (0.50 * 12%) + (0.50 * 4%)
= 8%
Bust
= (0.50 * 6%) + (0.50 * 18%)
= 12%
Portfolio expected return = (0.25 * 8%) + (0.75 * 12%)
= 11%
Famtrk153 Corp. is a popular car-wash operation that measures its activity in terms of number of cars washed. Last month, the budgeted level of activity was 1,140 cars washed and the actual level of activity was 1,130 cars washed. The cost formula for the washing expenses is $3.80 per car washed plus $21,000 per month. (ID#11659) The actual Famtrk153's washing expense was $21,700. Q) What was the Famtrk153's spending variance for the washing expenses last month?
Answer:
the spending variance is $3,594 favorable
Explanation:
The computation of the spending variance is as follows
Budgeted Expense is
= 1,130 cars × $3.80 per car + $21,000
= $4,294 + $21,000
= $25,294
And, the actual expese is $21,700
So, the spending variance is
= $25,294 - $21,700
= $3,594
Hence, the spending variance is $3,594 favorable
