Figure 21-4
Rollo Company Has Developed Cost Formulas for the Drivers

question 5

Multiple Choice

Figure 21-4
Rollo Company has developed cost formulas for the drivers of the following production activities: $\begin{array}{llcc}\text { Driver } & \text { Activity } & \text { Fixed } & \text { Variable } \\\text { Labour hours } & \text { Materials } & -0- & 20 \\\text { Labour hours } & \text { Labour } & -0- & 10\\\text { Machine hours } & \text { Maintenance } & 10,000 & 8 \\\text { Machine hours } & \text { Machining } & 50,000 & 2 \\\text { Number of setups } & \text { Inspections } & 30,000 & 200 \\\text { Number of setups } & \text { Setups } & -0- & 300 \\\text { Number of purchase orders } & \text { Purchasing } & 75,000 & 3\end{array}$
-Refer to Figure 21-4. The budgeted inspection cost for 20 setups is

• A)£175,860.
• B)£40,000.
• C)£34,000.
• D)£30,000.

Comprehend the role of managerial accounting in analysis, planning, and control of costs.

Understand the principles of total quality management and its focus on continuous improvement.

Distinguish between the focuses of financial and managerial accounting in terms of organizational level.

Recognize the significance of control in the managerial process and its relationship to goal setting.

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Definitions:

Income

Income earned from employment or investments, typically on a consistent basis.

Consumption

The use of goods and services by households, constituting one of the major components of GDP and a primary indicator of economic health.

Budget Constraint

Indicates the various goods and services a consumer is able to buy, considering their earnings and the costs of those goods and services.

Papyrus Scrolls

Ancient writing materials made from the pith of the papyrus plant, used especially in Egypt for documents and texts.