Institute Technologies is choosing new cost drivers for its accounting system. One driver is labor hours; the other is a combination of machine hours for unit variable costs and number of setups for a pool of batch-level costs. Data for the past year follow. Budget Actual Labor hours 209,000 209,000 Machine hours 369,000 459,000 Number of setups 3,900 4,200 Unit variable cost pool $1,660,500 $2,065,500 Batch-level cost pool $1,053,000 $1,134,000 Assume that both cost pools for Institute are combined into a single pool, and labor hours is the driver. The total flexible budget for the actual level of labor hours and the total variance for the combined pool are: Flexible Budget Variance А. $1,660,500 $405,000 U $2,713,500 $2,794,500 $3,118,500 в. $486,000 U с. $405,000 U D. $ 81,000 U Е. $3,199,500 %24
Institute Technologies is choosing new cost drivers for its accounting system. One driver is labor hours; the other is a combination of machine hours for unit variable costs and number of setups for a pool of batch-level costs. Data for the past year follow. Budget Actual Labor hours 209,000 209,000 Machine hours 369,000 459,000 Number of setups 3,900 4,200 Unit variable cost pool $1,660,500 $2,065,500 Batch-level cost pool $1,053,000 $1,134,000 Assume that both cost pools for Institute are combined into a single pool, and labor hours is the driver. The total flexible budget for the actual level of labor hours and the total variance for the combined pool are: Flexible Budget Variance А. $1,660,500 $405,000 U $2,713,500 $2,794,500 $3,118,500 в. $486,000 U с. $405,000 U D. $ 81,000 U Е. $3,199,500 %24
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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