Question

The following is total monthly budgeted cost and activity information for the four activity centers in...

The following is total monthly budgeted cost and activity information for the four activity centers in the billing department of Oregon Power Company:

Activity Center Variable Fixed Cost Driver
Account inquiry $74,784 $150,000 3,200 labor hours
Correspondence $9,585 $27,000 2,700 letters
Account billing $156,000 $83,000 2,600,000 lines
Bill verification $9,180 $78,000 18,000 accounts


In September, actual costs and activity were as follows:


Activity Center Total Costs Driver Amount
Account inquiry $219,994 3,020 labor hours
Correspondence $36,869 2,840 letters
Account billing $235,099 2,540,000 lines
Bill verification $87,650 18,020 accounts


Required
Compute the flexible-budget variances for the following two activity cost items (round all answers to the nearest dollar and enter favorable variances as positive numbers and unfavorable variances as negative numbers):

  Bill verification    

  Correspondence  
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Homework Answers

Answer #1
Bill Verification
Budgeted
Variable Costs $   9,190.20 ($ 9180 x 18020 / 18000)
Fixed Costs $ 78,000.00
Total Costs $ 87,190.20 (a)
Actual $ 87,650.00 (b)
Variance $          (460) (a-b)
Correspondence
Budgeted
Variable Costs $ 10,082.00 ($ 9585 x 2840 / 2700)
Fixed Costs $ 27,000.00
Total Costs $ 37,082.00 (a)
Actual $ 36,869.00 (b)
Variance $            213 (a-b)
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