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The following is total monthly budgeted cost and activity information for the fo

ID: 2521280 • 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

$78,710

$164,000

3,400 labor hours

$10,150

$27,000

2,900 letters

$156,000

$70,000

2,600,000 lines

$9,460

$78,000

22,000 accounts

In September, actual costs and activity were as follows:

Total Costs

Driver Amount

$247,913

3,590 labor hours

$36,540

2,830 letters

$230,848

2,670,000 lines

$87,128

22,110 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 inquiry :

  Account billing :

Activity Center

Variable

Fixed

Cost Driver

Account inquiry

$78,710

$164,000

3,400 labor hours

Correspondence

$10,150

$27,000

2,900 letters

Account billing

$156,000

$70,000

2,600,000 lines

Bill verification

$9,460

$78,000

22,000 accounts

Explanation / Answer

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):

Actual Flexible budget Account inquiry 247913 247109 -804 U Account billing    230848 230200 -648 U