Question
Institute Technologies is choosing new cost drivers for its accounting system. One driver is labor hours; the other is a combination of machine hours for
Institute Technologies is choosing new cost drivers for its accounting system. One driver is labor hours; the other is a combination of machine hours for unit variable costs and number of setups for a pool of batch-level costs. Data for the past year follow.
| Budget | Actual | ||||||
| Labor hours | 218,000 | 218,000 | |||||
| Machine hours | 378,000 | 468,000 | |||||
| Number of setups | 3,000 | 3,300 | |||||
| Unit variable cost pool | $ | 1,701,000 | $ | 2,106,000 | |||
| Batch-level cost pool | $ | 900,000 | $ | 990,000 | |||
Assume that both cost pools for Institute are combined into a single pool, and labor hours is the driver. The total flexible budget for the actual level of labor hours and the total variance for the combined pool are:
| Flexible Budget | Variance | ||||||
| A. | $ | 1,701,000 | $ | 405,000 | U | ||
| B. | $ | 2,601,000 | $ | 495,000 | U | ||
| C. | $ | 2,691,000 | $ | 405,000 | U | ||
| D. | $ | 3,006,000 | $ | 90,000 | U | ||
| E. | $ | 3,096,000 | $ | 0 | |||
Multiple Choice
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Choice A
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Choice B
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Choice C
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Choice D
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Choice E
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Payroll Accounting 2022
Authors: Bernard J. Bieg, Judith A. Toland
32nd Edition
0357518756, 9780357518755
