Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher

Exercise 36

Budget versus Actual Costs

Refer to the data in Problem 15-35. At the end of the year, the following data are available on actual operations at the landfill.

Volume of trash	1,250 tons (400 loads)
Preparation costs (per load)	$ 56,000
Other variable costs (per ton)	38,750
Fixed costs	108,250
Total budgeted costs	$203,000

Required

Based on the actual activities and costs, would you change the recommendation you made in Problem 15-35? Why or why not?

Step 1 of 2

Budget v/s Actual Costs

We have calculated the following per tonnage costs in question no 35 which is again explained here:

1. Given that preparation cost is $ 45000 for 300 loads. This means that per load is costing $ 150. We also know that per load consists of 5 tones, hence cost of one tons of trash would be $ 30.

2. Other variable costs $ 45000 for 1500 tons of trash. Hence per ton costs would be $ 30.

3. Though fixed costs for 300 loads is $ 110000. This implies that fixed costs for per load is $ 366.67. And we know that per load contains 5 tones, therefore the costs per tons comes to $ 73.33.