Teel Printing uses two measures of activity, press runs and book set-ups, in the cost formulas in its budgets and performance reports. The cost formula for wages and salaries is $8,850 per month plus $400 per press run plus $950 per book set-up. The company expected its activity in July to be 204 press runs and 111 book set-ups, but the actual activity was 201 press runs and 110 book set-ups. The actual cost for wages and salaries in July was $193,780.The wages and salaries in the planning budget for July would be closest to:
A) $193,750
B) $196,672
C) $195,900
D) $193,780

Question

Quizplus · Accepted Answer

To calculate the expected wages and salaries for July, we need to use the cost formula given:

Expected cost = $8,850 + ($400 × 204 press runs) + ($950 × 111 book set-ups) 
Expected cost = $8,850 + $81,600 + $105,450 
Expected cost = $195,900

Therefore, the answer is choice C, which is closest to the expected cost of wages and salaries for July.

Teel Printing Uses Two Measures of Activity, Press Runs and Book