Bienestar, Inc., has done a cost analysis for its production of vests. The following activities and cost drivers have been developed: Activity Cost Formula
Maintenance $11,000 + $2 per machine hour
Machining $55,000 + $3 per machine hour
Inspection $70,000 + $500 per batch
Setups $2,000 per batch
Purchasing $80,000 + $150 per purchase order
Following are the actual costs of producing 75,000 vests: 5,000 machine hours; 10 batches; 20 purchase orders
What is the budget variance for purchasing in an activity-based performance report?
A) $1,000 U
B) $2,000 U
C) $3,000 U
D) none of these

Question

Bienestar, Inc., has done a cost analysis for its production of vests. The following activities and cost drivers have been developed: Activity Cost Formula
Maintenance $11,000 + $2 per machine hour
Machining $55,000 + $3 per machine hour
Inspection $70,000 + $500 per batch
Setups $2,000 per batch
Purchasing $80,000 + $150 per purchase order
Following are the actual costs of producing 75,000 vests: 5,000 machine hours; 10 batches; 20 purchase orders
 What is the budget variance for purchasing in an activity-based performance report?
A) $1,000 U 
B) $2,000 U 
C) $3,000 U 
D) none of these

Quizplus · Accepted Answer

The Answer of Bienestar, Inc., has done a cost analysis for its production of vests. The following activities and cost drivers have been developed: Activity Cost Formula
Maintenance $11,000 + $2 per machine hour
Machining $55,000 + $3 per machine hour
Inspection $70,000 + $500 per batch
Setups $2,000 per batch
Purchasing $80,000 + $150 per purchase order
Following are the actual costs of producing 75,000 vests: 5,000 machine hours; 10 batches; 20 purchase orders
 What is the budget variance for purchasing in an activity-based performance report?
A) $1,000 U 
B) $2,000 U 
C) $3,000 U 
D) none of these