In this problem, you must create the flexible budget and flexible budget variances for two cost items. I suggest the following steps for each item:

1. determine the cost function for the two items
2. plug in the appropriate activity amount and compute the budget
3. subtract the actual cost and compute the variance.

Be sure to follow the instructions about the sign that you should enter with your numerical answer. There is no partial credit - you must get both variances correct in order to get the full 10 points. ______________________________________________________

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

Activity Center	Variable	Fixed	Cost Driver
Account inquiry	$82,071	$153,000	3,300 labor hours
Correspondence	$9,744	$23,000	2,800 letters
Account billing	$153,000	$77,000	2,550,000 lines
Bill verification	$11,115	$78,000	19,500 accounts

In September, actual costs and activity were as follows:

Activity Center	Total Costs	Driver Amount
Account inquiry	$236,666	3,340 labor hours
Correspondence	$32,813	2,990 letters
Account billing	$239,993	2,730,000 lines
Bill verification	$88,289	19,440 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): 1. Correspondence 2. Account billing