The following is monthly budgeted cost and activity information for the four act
ID: 2468825 • Letter: T
Question
The following is monthly budgeted cost and activity information for the four activity centers in the billing department of Oregon Power Company:
Variable
Fixed
Cost Driver
$75,296
$156,000
3,200 labor hours
$10,150
$25,000
2,900 letters
$153,000
$86,000
2,550,000 lines
$11,505
$79,000
19,500 accounts
In September, actual costs and activity were as follows:
Total Costs
Driver Amount
$234,694
3,320 labor hours
$36,517
3,070 letters
$245,119
2,650,000 lines
$91,019
19,370 accounts
Required
Compute the flexible-budget variances for the following two activity cost items (round all answers to the nearest dollar and enter favorable variances as positive numbers and unfavorable variances as negative numbers):
Bill verification ( )
Account billing ( )
Variable
Fixed
Cost Driver
Account inquiry$75,296
$156,000
3,200 labor hours
Correspondence$10,150
$25,000
2,900 letters
Account billing$153,000
$86,000
2,550,000 lines
Bill verification$11,505
$79,000
19,500 accounts
Explanation / Answer
Activity centre Variable cost cost driver variable cost per unit of cost driver Account Billing $ 1,53,000.00 2550000 lines $ 0.06 Bill Verification $ 11,505.00 19500 accounts $ 0.59 Activity centre Cost drivers Cost formula Actual cost Flexible budget cost Variance Account Billing 2650000 lines $0.06 per line + $86000 $ 2,45,119.00 $ 2,45,000.00 $-119.00 Unfavourable Bill Verification 19370 accounts $0.59 per account + $79000 $ 91,019.00 $ 90,428.00 $-591.00 Unfavourable
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.