The following cost formula for total purchasing cost in a factory was developed using monthly data. Total cost=$235,000 + ($75 X Number of Purchase Orders) Next month, 8,000 purchase orders are predicted. The total cost predicted for the purchasing department next month. A: is $8,000 B: is $235,000 C: is $600,000 D: is $835,000 E: cannot be determined from the above formula

The following cost formula for total purchasing cost in a factory was developed using monthly data. Total cost=$235,000 + ($75 X Number of Purchase Orders) Next month, 8,000 purchase orders are predicted. The total cost predicted for the purchasing department next month. A: is $8,000 B: is $235,000 C: is $600,000 D: is $835,000 E: cannot be determined from the above formula

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Description: The following cost formula for totalpurchasing cost in a factory was developedusing monthly data. Total cost3$235,000 +($75 X Number of Purchase Orders) Nextmonth, 8,000 purchase orders are predicted.The total cost predicted for the purchasingdepart

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

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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Question

The following cost formula for total
purchasing cost in a factory was developed
using monthly data. Total cost3$235,000 +
($75 X Number of Purchase Orders) Next
month, 8,000 purchase orders are predicted.
The total cost predicted for the purchasing
department next month.
A: is $8,000
B: is $235,000
C: is $600,000
D: is $835,000
E: cannot be determined from the above
formula

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