Privitera Printing Uses Two Measures of Activity, Press Runs and Book

question 267

Multiple Choice

Privitera Printing uses two measures of activity, press runs and book set-ups, in the cost formulas in its budgets and performance reports. The cost formula for wages and salaries is $7,220 per month plus $650 per press run plus $1,110 per book set-up. The company expected its activity in January to be 188 press runs and 117 book set-ups, but the actual activity was 191 press runs and 114 book set-ups. The actual cost for wages and salaries in January was $269,270.
-The activity variance for wages and salaries in January would be closest to:

• A)$9,980 F
• B)$1,380 U
• C)$1,380 F
• D)$9,980 U

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Definitions:

Sunk Cost

Any cost that has already been incurred and that cannot be changed by any decision made now or in the future.

Obsolete Desk Calculators

Desk calculators that are no longer considered efficient or useful due to advancements in technology or changes in user needs.

Inventory

The total amount of goods a company has in stock, including raw materials, work-in-process, and finished goods.

Variable Costs

Expenses that change in proportion to the activity of a business, such as materials and labor costs.