The following is total monthly budgeted cost and activity information for the fo
ID: 2519336 • Letter: T
Question
The following is total monthly budgeted cost and activity information for the four activity centers in the billing department of Oregon Power Company:
Variable
Fixed
Cost Driver
$83,844
$164,000
3,400 labor hours
$9,520
$30,000
2,800 letters
$120,000
$79,000
2,400,000 lines
$10,780
$77,000
22,000 accounts
In September, actual costs and activity were as follows:
Total Costs
Driver Amount
$247,114
3,390 labor hours
$39,614
2,600 letters
$189,097
2,210,000 lines
$87,131
21,890 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):
Account billing :
Correspondence:
Variable
Fixed
Cost Driver
Account inquiry$83,844
$164,000
3,400 labor hours
Correspondence$9,520
$30,000
2,800 letters
Account billing$120,000
$79,000
2,400,000 lines
Bill verification$10,780
$77,000
22,000 accounts
Explanation / Answer
Compute the flexible-budget variances for the following two activity cost items
Flexible budget Actual Flexible budget variance Account billing 189500 189097 403 Favorable Correspondence 38840 39614 -774 UnfavorableRelated Questions
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