Rollo Company has developed cost formulas for the drivers of the following production activities:
$$\begin{array} { l l c c }
\text { Driver } & \text { Activits } & \text { Fixed } & \text { Variale } \
\hline \text { Labour hours } & \text { Materials } & \$ 0 & \$ 20 \
\text { Labour hours } & \text { Labour } & 0 & 10 \
\text { Machine hours } & \text { Maintenance } & 10,000 & 8 \
\text { Machine hours } & \text { Machiring } & 50,000 & 2 \
\text { Number of setups } & \text { Inspections } & 30,000 & 200 \
\text { Number of setups } & \text { Setups } & 0 & 300 \
\text { Number of purchase arders } & \text { Purchasing } & 75,00 & 3
\end{array}$$
-Refer to the figure.The activity levels are projected to be as follows: $$\begin{array} { l r }
\text { Labour hours } & 1,000 \
\text { Machine hours } & 5,000 \
\text { Setups } & 100 \
\text { Purchase orders } & 50
\end{array}$$ What is budgeted for this projected activity level?
A)$3,504,450
B)$1,655,430
C)$295,150
D)$165,543

Question

Rollo Company has developed cost formulas for the drivers of the following production activities:
$$\begin{array} { l l c c } 
\text { Driver } & \text { Activits } & \text { Fixed } & \text { Variale } \
\hline \text { Labour hours } & \text { Materials } & \$ 0 & \$ 20 \
\text { Labour hours } & \text { Labour } & 0 & 10 \
\text { Machine hours } & \text { Maintenance } & 10,000 & 8 \
\text { Machine hours } & \text { Machiring } & 50,000 & 2 \
\text { Number of setups } & \text { Inspections } & 30,000 & 200 \
\text { Number of setups } & \text { Setups } & 0 & 300 \
\text { Number of purchase arders } & \text { Purchasing } & 75,00 & 3
\end{array}$$
-Refer to the figure.The activity levels are projected to be as follows: $$\begin{array} { l r } 
\text { Labour hours } & 1,000 \
\text { Machine hours } & 5,000 \
\text { Setups } & 100 \
\text { Purchase orders } & 50
\end{array}$$ What is budgeted for this projected activity level?
A)$3,504,450
B)$1,655,430
C)$295,150
D)$165,543

Quizplus · Accepted Answer

The budgeted cost for each activity is calculated by adding the fixed cost to the product of the variable cost and the projected activity level. The total budgeted cost is the sum of the budgeted costs for all activities.- Materials: $0 + (20 \times 1,000) = \$20,000$- Labour: $0 + (10 \times 1,000) = \$10,000$- Maintenance: $10,000 + (8 \times 5,000) = \$50,000$- Machining: $50,000 + (2 \times 5,000) = \$60,000$- Inspections: $30,000 + (200 \times 100) = \$50,000$- Setups: $0 + (300 \times 100) = \$30,000$- Purchasing: $75,000 + (3 \times 50) = \$75,150$Adding these together: $20,000 + 10,000 + 50,000 + 60,000 + 50,000 + 30,000 + 75,150 = \$295,150$.

Rollo Company Has Developed Cost Formulas for the Drivers of the Following