Bunnie's Bakery anticipated making 17,000 fancy cakes during a recent period,requiring 14,000 hours of process time.Each hour of process time was expected to cost the firm $11.Actual activity for the period was higher than anticipated: 18,000 cakes and 15,200 hours.If each hour of process time actually cost Bunnie $12,what process-time variance would be disclosed on a performance report that incorporated static budgets and flexible budgets?
A)Choice A
B)Choice B
C)Choice C
D)Choice D
E)Choice E

Question

Bunnie's Bakery anticipated making 17,000 fancy cakes during a recent period,requiring 14,000 hours of process time.Each hour of process time was expected to cost the firm $11.Actual activity for the period was higher than anticipated: 18,000 cakes and 15,200 hours.If each hour of process time actually cost Bunnie $12,what process-time variance would be disclosed on a performance report that incorporated static budgets and flexible budgets? 
A)Choice A 
B)Choice B 
C)Choice C 
D)Choice D 
E)Choice E

Quizplus · Accepted Answer

To calculate the process-time variance, we need to calculate the static budget and the flexible budget first.

Static budget:
Hourly rate = $11
Process time = 14,000 hours
Total cost = Hourly rate x Process time = $11 x 14,000 = $154,000

Flexible budget:
Hourly rate = $12
Process time = 15,200 hours
Total cost = Hourly rate x Process time = $12 x 15,200 = $182,400

Now, we can calculate the process-time variance using the following formula:

Process-time variance = Flexible budget - Static budget
Process-time variance = $182,400 - $154,000
Process-time variance = $28,400

Therefore, the process-time variance would be $28,400, which is Choice C.

Bunnie's Bakery Anticipated Making 17,000 Fancy Cakes During a Recent