The Total Traceable Costs of the Account Billing Activity Centre

question 23

Multiple Choice

The total traceable costs of the account billing activity centre is $245,000. Cost behaviour analysis indicates that fixed costs are $75,000. Activity analysis indicates that the cost driver for account billing activity is the number of lines printed, and the total lines printed is 2,500,000.
-If the total sales activity variance was $15,000 favourable, and the total master-budget variance was $17,500 favourable, then the total flexible-budget variance must have been

• A) $32,500 favourable.
• B) $ 2,500 favourable.
• C) $ 2,500 unfavourable.
• D) undeterminable.

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Definitions:

Inventory Count

A physical verification of the quantities and condition of items in a company's inventory, used to ensure accuracy of accounting records.

LIFO Method

Last In, First Out; an accounting method for valuing inventory by treating the most recently produced items as the first to be sold.

Cost Of Goods Sold

Direct costs attributable to the production of goods sold by a company, including materials, labor, and overhead.

Merchandise

Goods that are purchased, stored, and sold by a business in the ordinary course of its operations, often referred to as inventory.