Mattison Company has developed cost formulas for the drivers of the following production activities: $$\begin{array} { l l r }
{ \text { Driver } } & \text { Activity } & \text { Fixed }& \text { Variable } \
\hline \text { Labor hours } & \text { Materials } & \$ 0&\$20\
\text { Labor hours } & \text { Labor } & 0 &10\
\text { Machine hours } & \text { Maintenance } & 10,000&8 \
\text { Machine hours } & \text { Machining } & 50,000&2 \
\text { Number of setups } & \text { Inspections } & 30,000&200 \
\text { Number of setups } & \text { Setups } & 0 &300\
\text { Number of purchase orders } & \text { Purchasing } & 75,000&3
\end{array}$$
The activity levels are projected to be as follows: $\begin{array} { l }
\text {Labor hours}&1,000\
\text {Machine hours }&5,000\
\text {Setups }&100\
\text {Purchase orders }&50\
\end{array}$

What is budgeted for this projected activity level?
A)$3,504,450
B)$1,655,430
C)$165,543
D)$295,150

Question

Mattison Company has developed cost formulas for the drivers of the following production activities: $$\begin{array} { l l r } 
 { \text { Driver } } & \text { Activity } & \text { Fixed }& \text { Variable } \
\hline \text { Labor hours } & \text { Materials } & \$ 0&\$20\
\text { Labor hours } & \text { Labor } & 0 &10\
\text { Machine hours } & \text { Maintenance } & 10,000&8 \
\text { Machine hours } & \text { Machining } & 50,000&2 \
\text { Number of setups } & \text { Inspections } & 30,000&200 \
\text { Number of setups } & \text { Setups } & 0 &300\
\text { Number of purchase orders } & \text { Purchasing } & 75,000&3
\end{array}$$
The activity levels are projected to be as follows: $\begin{array} { l  }
 \text {Labor hours}&1,000\
\text {Machine hours }&5,000\
\text {Setups }&100\
\text {Purchase orders }&50\
\end{array}$

What is budgeted for this projected activity level?
A)$3,504,450
B)$1,655,430
C)$165,543
D)$295,150

Quizplus · Accepted Answer

To calculate the budgeted amount for the projected activity level, we need to apply the cost formulas for each activity. This involves multiplying the variable cost per unit of activity by the projected level of activity and adding any fixed costs associated with that activity.1. Materials: $0 + (20 \times 1,000) = \$20,000$2. Labor: $0 + (10 \times 1,000) = \$10,000$3. Maintenance: $10,000 + (8 \times 5,000) = \$50,000$4. Machining: $50,000 + (2 \times 5,000) = \$60,000$5. Inspections: $30,000 + (200 \times 100) = \$50,000$6. Setups: $0 + (300 \times 100) = \$30,000$7. Purchasing: $75,000 + (3 \times 50) = \$75,150$Adding all these amounts together gives us the total budgeted amount:$\$20,000 + \$10,000 + \$50,000 + \$60,000 + \$50,000 + \$30,000 + \$75,150 = \$295,150.$

Mattison Company Has Developed Cost Formulas for the Drivers of the Following