Villanova, Inc., has done a cost analysis for its production of rubber stamps. The following activities and cost drivers have been developed: Activity Cost Formula
Design $5,000 + $0.05 per machine hour
Machining $25,000 + $0.01 per machine hour
Setups $35 per batch
Purchasing $50 + $15 per purchase order
Following are the actual costs of producing 35,000 rubber stamps: 1,000 machine hours; 5 batches; 30 purchase orders
Design $5,080
Machining ?
Setups ?
Purchasing $600
The following variances were given in the activity performance report:
Design ?
Machining $40 F
Setups $15 F
Purchasing ?
What is the activity variance for design?
A) $40 F
B) $30 U
C) $15 F
D) $100 U

Question

Quizplus · Accepted Answer

The actual cost for design is $5,080. The expected cost is $5,000 + (0.05 * 1,000) = $5,050. The variance is $5,080 - $5,050 = $30 U (unfavorable).