The total traceable costs of the account billing activity centre is $245,000. Cost behaviour analysis indicates that fixed costs are $75,000. Activity analysis indicates that the cost driver for account billing activity is the number of lines printed, and the total lines printed is 2,500,000.
-If the total sales activity variance was $15,000 favourable, and the total master-budget variance was $17,500 favourable, then the total flexible-budget variance must have been
A) $32,500 favourable.
B) $ 2,500 favourable.
C) $ 2,500 unfavourable.
D) undeterminable.

Question

Quizplus · Accepted Answer

The flexible-budget variance is calculated by subtracting the sales activity variance from the master-budget variance. Here, $17,500 (master-budget variance) - $15,000 (sales activity variance) = $2,500 favourable.

The Total Traceable Costs of the Account Billing Activity Centre