Figure 16-2
Glenn, SA Following Are the Actual Costs of Producing 75,000 T-Shirts: 5,000

question 14

Multiple Choice

Figure 16-2
Glenn, SA., has done a cost analysis for its production of T-shirts. The following activities and cost drivers have been developed: $\begin{array}{ll}\text { Activity } & \text { Cost Formula } \\\text { Maintenance } & £ 11,000+£ 2 \text { per machine hour } \\\text { Machining } & £ 55,000+£ 3 \text { per machine hour } \\\text { Inspection } & £ 70,000+£ 500 \text { per batch } \\\text { Setups } & £ 2,000 \text { per batch } \\\text { Purchasing } & £ 80,000+£ 150 \text { per purchase order }\end{array}$ Following are the actual costs of producing 75,000 T-shirts: 5,000 machine hours; 10 batches; 20 purchase orders $\begin{array}{lr}\text { Maintenance } & £ 20,000 \\\text { Machining } & 73,000 \\\text { Inspection } & 73,000 \\\text { Setups } & 18,000 \\\text { Purchasing } & 82,000\end{array}$
-Refer to Figure 16-2. What is the budget variance for purchasing in an activity-based performance report?

• A)£1,000 U
• B)£2,000 U
• C)£3,000 U
• D)none of the above

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Definitions:

Vacation Privileges

Vacation privileges refer to the policy and benefits related to employees' eligibility and entitlement to take paid time off for personal rest, travel, or leisure.

Operations

The day-to-day activities required for continued business functioning, focusing on manufacturing, providing services, or other core business processes.

Social Security Taxes

Taxes collected by the government to fund the Social Security program, which provides retirement, disability, and survivorship benefits.

Medicare Taxes

Taxes deducted from employee paychecks and also matched by employers to fund the Medicare program, a federal health insurance program for individuals who are 65 and older and for some younger people with disabilities.