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.
-With regard to flexible-budget variances, Caulkins Corporation showed a $2,000 unfavourable variable cost variance and a $450 favourable fixed cost variance. The variance for operating income was
A) $1,550 unfavourable.
B) $2,450 favourable.
C) $2,450 unfavourable.
D) undeterminable.

Question

Quizplus · Accepted Answer

The total variance for operating income is the sum of the variable cost variance and the fixed cost variance. The $2,000 unfavourable variable cost variance and the $450 favourable fixed cost variance result in a net $1,550 unfavourable variance for operating income.

The Total Traceable Costs of the Account Billing Activity Centre