Bienestar, Inc., has done a cost analysis for its production of vests. The following activities and cost drivers have been developed: $\begin{array} { l l } \text { Activity } & \text { Cost Formula } \ \text { Maintenance } & \$ 11,000 + \$ 2 \text { per machine hour } \ \text { Machining } & \$ 55,000 + \$ 3 \text { per machine hour } \ \text { Inspection } & \$ 70,000 + \$ 500 \text { per batch } \ \text { Setups } & \$ 2,000 \text { per batch } \ \text { Purchasing } & \$ 80,000 + \$ 150 \text { per purchase order } \end{array}$
Following are the actual costs of producing 75,000 vests: 5,000 machine hours; 10 batches; 20 purchase orders
$\begin{array}{lr}
\text { Maintenance } & \$ 20,000 \
\text { Machining } & 73,000 \
\text { Inspection } & 73,000 \
\text { Setups } & 18,000 \
\text { Purchasing } & 82,000
\end{array}$ What is the budget variance for purchasing in an activity-based performance report?
A)$1,000 U
B)$2,000 U
C)$3,000 U
D)none of these

Question

Quizplus · Accepted Answer

The budgeted cost for purchasing is calculated as follows: $80,000 + ($150 per purchase order * 20 purchase orders) = $80,000 + $3,000 = $83,000. The actual cost is $82,000. Therefore, there is no variance listed that matches the calculated variance of $1,000 favorable, which is not an option provided. Hence, the correct answer is "none of these."

Bienestar, Inc Following Are the Actual Costs of Producing 75,000 Vests: 5,000