Harald, Inc., has done a cost analysis for its production of bumper stickers.The following activities and cost drivers have been developed: Following are the actual costs of producing 85,000 stickers: 5,000 machine hours; 10 batches; 20 purchase orders

- What is the budget variance for machining in an activity-based performance report?
A) $50 F
B) $50 U
C) $800 U
D) $800 F

Question

Harald, Inc., has done a cost analysis for its production of bumper stickers.The following activities and cost drivers have been developed:

Following are the actual costs of producing 85,000 stickers: 5,000 machine hours; 10 batches; 20 purchase orders
Harald, Inc., has done a cost analysis for its production of bumper stickers.The following activities and cost drivers have been developed: Following are the actual costs of producing 85,000 stickers: 5,000 machine hours; 10 batches; 20 purchase orders - What is the budget variance for machining in an activity-based performance report? A) $50 F B) $50 U C) $800 U D) $800 F

- What is the budget variance for machining in an activity-based performance report?

- What is the budget variance for machining in an activity-based performance report?
A) $50 F 
B) $50 U 
C) $800 U 
D) $800 F

Quizplus · Accepted Answer

To calculate the budget variance for machining, we need to compare the actual cost of machining to the budgeted cost of machining. However, the budgeted cost of machining is not provided in the information given. Therefore, we need to calculate the budgeted cost of machining using the cost driver rate and the actual amount of cost driver used.
Cost driver rate for machining = Actual cost of machining / Actual machine hours used
= $46,000 / 5,000 machine hours
= $9.20 per machine hour

Budgeted cost of machining = Cost driver rate x Budgeted machine hours
= $9.20 per machine hour x 6,000 machine hours (budgeted)
= $55,200 (budgeted)

Now, we can calculate the budget variance for machining as follows:
Budget variance for machining = Budgeted cost of machining - Actual cost of machining
= $55,200 - $46,000
= $9,200 U

Therefore, the correct answer is C, $800 U.