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The following is total monthly budgeted cost and activity information for the fo

ID: 2522099 • Letter: T

Question

The following is total monthly budgeted cost and activity information for the four activity centers in the billing department of Oregon Power Company:

Variable

Fixed

Cost Driver

$81,939

$155,000

3,300 labor hours

$9,632

$30,000

2,800 letters

$156,000

$86,000

2,600,000 lines

$7,980

$76,000

19,000 accounts


In September, actual costs and activity were as follows:

Total Costs

Driver Amount

$240,493

3,420 labor hours

$39,114

2,800 letters

$231,236

2,410,000 lines

$83,531

19,000 accounts


Required

Compute the flexible-budget variances for the following two activity cost items (round all answers to the nearest dollar and enter favorable variances as positive numbers and unfavorable variances as negative numbers):

  Correspondence __________

  Account billing ___________

Activity Center

Variable

Fixed

Cost Driver

Account inquiry

$81,939

$155,000

3,300 labor hours

Correspondence

$9,632

$30,000

2,800 letters

Account billing

$156,000

$86,000

2,600,000 lines

Bill verification

$7,980

$76,000

19,000 accounts

Explanation / Answer

Compute the flexible-budget variances for the following two activity cost items (round all answers to the nearest dollar and enter favorable variances as positive numbers and unfavorable variances as negative numbers):

Flexible budget Actual Flexible budget variance Correspondence 39632 39114 518 F Account billing 230600 231236 -636 U