Figure 16-4
Villafane, SA Following Are the Actual Costs of Producing 35,000 Decals: 1,000

question 50

Multiple Choice

Figure 16-4
Villafane, SA., has done a cost analysis for its production of decals. The following activities and cost drivers have been developed: $\begin{array}{ll}\text { Activity } & \text { Cost Formula } \\\text { Design } & £ 5,000+£ 0.05 \text { per machine hour } \\\text { Machining } & £ 25,000+£ 0.01 \text { per machine hour } \\\text { Setups } & £ 35 \text { per batch } \\\text { Purchasing } & £ 50+£ 15 \text { per purchase order }\end{array}$ Following are the actual costs of producing 35,000 decals: 1,000 machine hours; 5 batches; 30 purchase orders $\begin{array}{lr}\text { Design } & £ 5,080 \\\text { Machining } & ? \\\text { Setups } & ? \\\text { Purchasing } & £ 600\end{array}$ The following variances were given in the activity performance report: $\begin{array}{lr}\text { Design } & ? \\\text { Machining } & £ 40 \mathrm{~F} \\\text { Setups } & £ 15 \mathrm{~F} \\\text { Purchasing } & ?\end{array}$
-Refer to Figure 16-4. What is the actual cost of machining?

• A)£24,970
• B)£25,010
• C)£25,050
• D)none of the above

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Definitions:

Sales Commissions

The portion of sales revenue paid to sales employees or agents, usually calculated as a percentage of the sales they generate.

Monthly Sales

The total revenue generated from sales activities during a calendar month.

Net Operating Income

A metric assessing a corporation's earnings from its primary operations, before considering reductions for interest and taxes.

Contribution Margin Ratio

The percentage of each sales dollar that remains after variable costs are subtracted, indicating how much contributes towards fixed costs and profit.