Figure 16-3
Harald, SA., has done a cost analysis for its production of bumper stickers. The following activities and cost drivers have been developed: $\begin{array}{ll}
\text { Activity } & \text { Cost Formula } \
\text { Maintenance } & £ 11,000+£ 0.11 \text { per machine hour } \
\text { Machining } & £ 25,000+£ 0.50 \text { per machine hour } \
\text { Setups } & £ 50 \text { per batch } \
\text { Purchasing } & £ 200+£ 45 \text { per purchase order }
\end{array}$ Following are the actual costs of producing 85,000 stickers: 5,000 machine hours; 10 batches; 20 purchase orders $\begin{array}{lr}
\text { Maintenance } & £ 11,500 \
\text { Machining } & 28,300 \
\text { Setups } & 550 \
\text { Purchasing } & 1,000
\end{array}$
-Refer to Figure 16-3. What is the budget variance for total costs in an activity-based performance report?
A)£700 U
B)£700 F
C)£800 U
D)none of the above

Question

Quizplus · Accepted Answer

The budget variance for total costs can be calculated by comparing the budgeted costs based on the given cost drivers and the actual costs. - Maintenance: Budgeted = £11,000 + (£0.11 * 5,000) = £11,550. Actual = £11,500. Variance = £50 F.- Machining: Budgeted = £25,000 + (£0.50 * 5,000) = £27,500. Actual = £28,300. Variance = £800 U.- Setups: Budgeted = £50 * 10 = £500. Actual = £550. Variance = £50 U.- Purchasing: Budgeted = £200 + (£45 * 20) = £1,100. Actual = £1,000. Variance = £100 F.Total budgeted costs = £11,550 + £27,500 + £500 + £1,100 = £40,650.Total actual costs = £11,500 + £28,300 + £550 + £1,000 = £41,350.Total variance = £41,350 - £40,650 = £700 U.

Figure 16-3 Harald, SA Following Are the Actual Costs of Producing 85,000 Stickers: 5,000

Figure 16-3
Harald, SA Following Are the Actual Costs of Producing 85,000 Stickers: 5,000