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Problem 10-23 (45 minutes)
1. The cost reports are of little use for assessing how well costs were
controlled. The problem is that the company is comparing budgeted
costs at one level of activity to actual costs at another level of activity.
control report prepared by the company. The overall activity variance is
$12,250 F (favorable) which simply reflects the fact that the actual level
of activity was significantly less than the budgeted level of activity. The
variable costs would naturally be less than budgeted.
