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

Cost = Fixed cost + (Variable cost per unit1 × q1) + (Variable cost per unit2 × q2)
= $8,850 + ($400 × 204) + ($950 × 111) = $195,900

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