Bienestar, Inc., has done a cost analysis for its production of vests. The follo

Question

Bienestar, Inc., has done a cost analysis for its production of vests. The following activities and cost drivers have been developed:

Following are the actual costs of producing 75,000 vests: 5,000 machine hours; 10 batches; 20 purchase orders

What is the budget variance for setups in an activity-based performance report?

Activity Cost Formula Maintenance $11,000 + $2 per machine hour Machining $55,000 + $3 per machine hour Inspection $70,000 + $500 per batch Setups $2,000 per batch Purchasing $80,000 + $150 per purchase order

Explanation / Answer

$2,000 F

The budget variance for setups in an activity-based performance report is $2,000 F.

Actual $18,000 Budget($2,000 * 10) $20,000 Variance $2,000 F

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