In: Accounting
Calculation of variable cost per cost driver:
Activity center | Variable | Fixed | Cost driver | Variable cost p.u |
Account Inquiry | $75,936 | $165,000 | 3,200 Labor hours | $23.73 |
Correspondence | $10,324 | $21,000 | 2,900 letters | $3.56 |
Account billing | $156,000 | $76,000 | 2,600,000 lines | $0.06 |
Bill verification | $10,105 | $78,000 | 21,500 accounts | $0.47 |
Flexible budget for actual units of cost driver:
Budgeted Variable cost p.u | Cost driver | Total Flexible VC | |
Account Inquiry | $23.73 | 3,030 labor hours | $71,902 |
Correspondence | $3.56 | 2,880 letters | $10,253 |
Account billing | $0.06 | 2,780,000 lines | $166,800 |
Bill verification | $0.47 | 21,350 accounts | $10,035 |
Variance:
Actual Total cost (A) |
Fixed Cost (B) |
Actual Variable cost (C)=(A)-(B) | Flexible Variable cost Budget | Variance | |
Account Inquiry | $236,390 | $165,000 | $71,390 | $71,902 | $512 |
Correspondence | $31,409 | $21,000 | $10,409 | $10,253 | ($156) |
Account billing | $241,854 | $76,000 | $165,854 | $166,800 | $946 |
Bill verification | $87,145 | $78,000 | $9,145 | $10,035 | $890 |
$596,798 | $340,000 | $256,798 | $258,989 | $2,191 |