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

question 229

Multiple Choice

Lauter 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 $5,300 per month plus $480 per press run plus $1,080 per book set-up. The company expected its activity in October to be 169 press runs and 64 book set-ups, but the actual activity was 167 press runs and 60 book set-ups. The actual cost for wages and salaries in October was $155,690.
-The wages and salaries in the planning budget for October would be closest to:

• A) $157,555
• B) $155,690
• C) $150,260
• D) $155,540

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Definitions:

Direct Materials

Raw materials that can be directly attributed to the production of goods, forming a significant part of the finished product.

Period Costs

Expenses that are not directly tied to the production of goods or services and are charged to the period in which they are incurred, such as selling, general, and administrative expenses.

Balance Sheet

A financial statement that presents a company's financial position at a specific point in time, including assets, liabilities, and equity.

Income Statement

The income statement is a financial report that details a company's revenues, expenses, and profits over a specific period, showing how the net revenue of the business is transformed into net income.