Solution to 16.61
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Solution to 16.61

Course Number: ACCT 311, Spring 2013

College/University: Liberty

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Chapter 16 - Fundamentals of Variance Analysis 16 Fundamentals of Variance Analysis Solutions to Review Questions 16-1. For performance evaluation purposes, the costing format should identify the actual costs for comparison with expected costs during the relevant period. Under absorption costing, the manufacturing fixed costs are allocated on a per unit basis. An increase in production results in a lower per...

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16 Chapter - Fundamentals of Variance Analysis 16 Fundamentals of Variance Analysis Solutions to Review Questions 16-1. For performance evaluation purposes, the costing format should identify the actual costs for comparison with expected costs during the relevant period. Under absorption costing, the manufacturing fixed costs are allocated on a per unit basis. An increase in production results in a lower per unit cost. If all of the production is sold, all of the fixed cost will be charged against profit. However, if some of the costs are assigned to inventory, the result can be a deferral of costs that should be evaluated at this time. This problem is highlighted by the suggestion that one can increase production in times of declining sales in order to help the bottom line by spreading fixed costs over more units. Because variable costing excludes fixed overhead for inventory valuation (fixed overhead is treated as a period expense), there is no motivation to produce goods for inventory. 16-2. False. Only variable costs and revenues flex with changes in activity. Fixed costs are expected to remain the same when operations are in the relevant range. 16-3. (d) Appropriate for any level of activity. 16-4. (b) The master budget is based on a predicted level of activity and a flexible budget is based on the actual level of activity. 16-5. False. A standard is related to a cost per unit. Budgets focus on totals. 16- 1 Chapter 16 - Fundamentals of Variance Analysis 16-6. The three primary sources of variances are: a. price variances, which arise because actual material prices differ from standards; b. efficiency variances which occur when the relationship between the usage of input factors (labor, materials, variable overhead) differs from that which would be expected to produce a given level of output; and c. activity variances, which represent differences between, planned (master budget) output levels and the output levels actually attained during the period. 16-7. The fixed cost variances differ from variable cost variances because fixed costs do not vary with the level of production activity. Therefore, the fixed costs in the flexible budget will be the same as in the master budget (within the relevant range). Additionally, there are no efficiency variances for fixed costs because there is no input-output relationship that can be applied. 16- 2 Chapter 16 - Fundamentals of Variance Analysis Solutions to Critical Analysis and Discussion Questions 16-8. Preparation of the ex-post budget allows management to compare actual results with the budget that would have been instituted if certain ex-ante factors were known. The most significant of these is, typically, volume of activity. By controlling for the difference between ex-ante expectations and the ex-post volumes, comparisons between actual results and plans can be more meaningful. The controllable factors (e.g., costs per unit, efficiency, sales prices) can be isolated and evaluated. 16-9. A flexible budget indicates budgeted revenues, costs and profits for virtually all feasible levels of activity. Managers can use the flexible budget to determine what costs should be assuming different levels of activity. Because changes in volume of production might not be within the particular managers control, the flexible budget allows supervisory managers to isolate the effect of changes in volume on the overall costs of a department in question. The flexible budget also separates fixed and variable costs. Generally, fixed costs are less controllable in the short run than variable costs. 16-10. Selling more units of a product or service (assuming the price is not changed) might be good news. Having managers offer significant incentives (or, in the extreme, offering to buy back unused product) might be an example of bad news, because these incentives might result in lower profits. 16-11. The action that management can take in response to price variances is probably quite different than the action that can be taken in response to efficiency variances. The latter is generally more subject to management control. Also, different departments might be responsible for each variance. For example, purchasing might be responsible for the materials price variance and production for the materials efficiency variance. 16-12. This problem arises more frequently than one would hope. Because costs are accumulated in responsibility centers usually according to where the cost is incurred, it is quite likely that the production department will be charged with a cost that originated by the action of some other (e.g., sales) department. In accepting the rush order, the sales department would either have raised the selling price to compensate for the special delivery or undertaken the rush order to avoid losing a sale. The extra costs incurred in other departments as a direct result of the sales department's action should be chargeable back to the sales department. 16- 3 Chapter 16 - Fundamentals of Variance Analysis 16-13. Typically, the labor price variances are relatively small since the rates are usually determined in advance through the union negotiation process. However, if a line manager uses workers that are more skilled (and thus higher paid) than the labor that was considered when preparing the budget, an unfavorable price variance would arise that would be the responsibility of the line manager. Presumably, the manager would do this only when the manager expected efficiency improvements at least equal to the unfavorable price variance. If overtime premiums are not accounted for separately, then unbudgeted overtime premiums could be the cause of price variances. 16-14. False. The production volume variance arises because fixed overhead is applied over a greater or lesser number of units than were used in deriving the fixed overhead application rate. Hence, the production volume variance does not tell us whether we spent more or less, but rather only that we produced more or less than expected. 16-15. It is necessary to investigate the reasons why volume fell short of expectations. If marketing was unable to sell the production then the marketing manager might be held responsible. However, if production were operating inefficiently and, hence, not producing at the level which marketing could handle then the matter could be turned around and production should be held responsible for the shortfall. The point of the question is that variances in one department (e.g., production) might arise due to activities in other departments. While this occurs infrequently, it is worthy of investigation if managers continue to argue that their performance is adversely affected by others actions. 16- 4 Chapter 16 - Fundamentals of Variance Analysis Solutions to Exercises 16-16. (20 min.)Flexible Budgeting: Windsor, Inc. Calculations: Master budget dollar amount Sales revenue..................................................... unit = 90,000 units x $36 per Variable costs...................................................... unit = 90,000 units x $15 per Fixed costs.......................................................... 3,240,000 $1,350,000 $900,000 Windsor, Inc. Flexible Budget Sales revenue..................................................... (= $36 x 92,000) $3,312,000 Less: Variable manufacturing costs.......................... (= $15 x 92,000) 1,380,000 Contribution margin............................................. $1,932,000 Less: Fixed manufacturing costs............................... 900,000 Operating profits.................................................. $1,032,000 16-17. (30 min.)Sales Activity Variance: Windsor, Inc. Flexible Budget (based on actual of 92,000 units) Sales revenue..................................................... $3,312,000 Less: Variable manufacturing costs.......................... 1,380,000 Contribution margin............................................. $1,932,000 Less: Fixed costs....................................................... 900,000 Operating profits.................................................. $1,032,000 16- 5 Sales Activity Variance $72,000 F Master Budget (based on budgeted 90,000 units) $3,240,000 30,000 U $42,000 F 1,350,000 $1,890,000 ________ $42,000 F 900,000 $990,000 Chapter 16 - Fundamentals of Variance Analysis 16-18. (30 min.)Profit Variance Analysis: Windsor, Inc. Actual (92,000 Manufacturing Sales Price Flexible Budget Activity Units) Variances Variance (92,000 Units) Variance Sales revenue..................................................... $3,353,400a $41,400 F $3,312,000b $72,000 F Less: Variable manufacturing costs.......................... $248,400 U _________ 1,628,400d 1,380,000e 30,000 U Contribution margin............................................. 248,400 U 1,725,000 $41,400 F $1,932,000 42,000 F Less: Fixed manufacturing costs..............................._________ 900,000 900,000 ________ _________ _________ Operating profits.................................................. $248,400 U $825,000 $41,400 F $1,032,000 $42,000 F Total Variance from Flexible Budget $207,000 U (= $825,000 $1,032,000) Total Variance from Master Budget $165,000 U (= $825,000 $990,000) a 92,000 units x $36.45 b 92,000 units x $36 c 90,000 units x $36 d 92,000 units x $17.70 e 92,000 units x $15 f 90,000 units x $15 16- 6 Master Budget (90,000 Units) $3,240,000c 1,350,000f 1,890,000 900,000 $990,000 Chapter 16 - Fundamentals of Variance Analysis 16-19. (20 min.) Flexible Budget. a. $40,000 b. $8 per unit VC = (TC FC) X = ($120,000 $40,000) 10,000 units c. $104,000 TC = F + VX = $40,000 + ($8 x 8,000 units) d. $168,000 TC = F + VX = $40,000 + ($8 x 16,000 units) 16- 7 Chapter 16 - Fundamentals of Variance Analysis 16-20. (25 min.)Fill In Amounts On Flexible Budget Graph. Computations: (a) Profit = (P V)X FC $32,000 = (P V)(2,000 units) $200,000 $232,000 (P V) = = $116 per unit 2,000 units (b) $90,000 = $116 X $200,000 $116X = $90,000 + $200,000 $290,000 X= = 2,500 units $116 16- 8 Chapter 16 - Fundamentals of Variance Analysis 16-21. (25 min.)Flexible Budget. Computations: (a) Profit = (P V)X FC $6,000 = $4X $70,000 $4x = $6,000 + $70,000 $64,000 X= = 16,000 units $4 (b) $36,000 = $4X $70,000 $4x = $36,000 + $70,000 $106,000 X= = 26,500 units $4 16- 9 Chapter 16 - Fundamentals of Variance Analysis 16-22. (35 min.)Prepare Flexible Budget: Data-2-Go. Flexible Budget (based on actual of Calculations 750,000 units) (000 omitted for units) Sales revenue..................................................... $5,625,000 $6,000,000 x (750 800) Variable costs: Blank drives..................................................... ,687,500 1 1,800,000 x (750 800) Direct labor...................................................... 393,750 420,000 x (750 800) Variable overhead............................................ 731,250 780,000 x (750 800) Variable marketing and administrative............ 562,500 600,000 x (750 800) Total variable costs............................................. $3,375,000 Contribution margin............................................. $2,250,000 Fixed costs: Manufacturing overhead.................................. $ 1,200,000 Marketing......................................................... 360,000 Administrative.................................................. 225,000 Total fixed costs.................................................. $1,785,000 Operating profits..................................................465,000 $ 16- 10 Chapter 16 - Fundamentals of Variance Analysis 16-23. (45 min.)Sales Activity Variance: Data-2-Go. Flexible Budget (based on actual of 750,000 units) Sales revenue..................................................... $5,625,000 Variable costs: Blank drives..................................................... 1,687,500 Direct labor...................................................... 393,750 Variable overhead............................................ 731,250 Variable marketing and administrative............ 562,500 Total variable costs............................................. $3,375,000 Contribution margin............................................. $2,250,000 Fixed costs: Manufacturing overhead.................................. $ 1,200,000 Marketing......................................................... 360,000 Administrative.................................................. 225,000 Total fixed costs.................................................. $1,785,000 Operating profits.................................................. $465,000 16- 11 $375,000 U Master Budget (based on budgeted 800,000 units) $6,000,000 112,500 F 26,250 F 48,750 F 37,500 F $225,000 F $150,000 U 1,800,000 420,000 780,000 600,000 $3,600,000 $2,400,000 Sales Activity Variance $150,000 F $ 1,200,000 360,000 225,000 $1,785,000 $ 615,000 Chapter 16 - Fundamentals of Variance Analysis 16-24. (30 min.)Profit Variance Analysis: Data-2-Go. Flexible Budget (based on Sales 750,000 Activity units) Variance $5,625,000 $375,000 U 1,687,500 112,500 F 393,750 26,250 F 731,250 48,750 F Actual Marketing and (based on Administrative 750,000 Manufacturing Variances Sales Price units) Variances Variance Sales revenue..................................................... $6,210,000 $585,000 F Blank drives......................................................... 1,800,000 $112,500 U Direct labor.......................................................... 345,000 48,750 F Variable manufacturing....................................... 843,000 111,750 U Variable marketing and administrative................................................... 585,000 $22,500 U 562,500 37,500 F Total variable costs............................................. $3,573,000 $175,500 U $22,500 U $3,375,000 $225,000 F Contribution margin............................................. $2,637,000 $175,500 U $22,500 U $585,000 F $2,250,000 $150,000 U Fixed costs: Manufacturing 1,236,000 36,000 U $ 1,200,000 Overhead............................................................. Marketing......................................................... 360,000 0 360,000 Administrative.................................................. 255,000 30,000 U 225,000 Total fixed costs.................................................. $1,851,000 $ 36,000 U $30,000 U 0 $1,785,000 0 Operating profits.................................................. $ 786,000 $211,500 U $52,500 U $585,000 F $465,000 $150,000 U 16- 12 Master Budget (based on 800,000 units) $6,000,000 1,800,000 420,000 780,000 600,000 $3,600,000 $2,400,000 $ 1,200,000 360,000 225,000 $1,785,000 $ 615,000 Chapter 16 - Fundamentals of Variance Analysis 16-25. (15 min.)Assigning Responsibility: Wallace Manufacturing. Answers will vary. This situation is a normal part of a production departments business and would probably be charged to the production department. In the future, it would be beneficial for the production department to be able to rely on the purchasing departments work with reasonable assurance. The purchasing department should be charged for the rework if the mistake was due to negligence on the part of the purchasing department to give them incentives to do the job right. 16-26. (15 min.)Assigning Responsibility: Davidson Communications. It appears that the Building 404 manager acted against the best interests of the company by refusing to shut down production temporarily. This refusal cost the company $75,000 and much time and effort including the opportunity cost of lost profits due to returns and warranty repair costs. However, management is also to blame for giving the Building 404 manager the wrong incentives. Hopefully this incident will not happen again and production managers will be given proper incentives to cooperate, so the $75,000 could be written off as an abnormal expense for the period. 16-27. (10 min.)Variable Cost Variances. Actual Costs Price Variance Actual Inputs at Standard Price Efficiency Variance $28 x 1,600 = $44,800 $45,000 $200 U $28 x .25 x 5,600 = $39,200 $5,600 U 16- 13 Flexible Budget (Standard Inputs Allowed for Good Output) Chapter 16 - Fundamentals of Variance Analysis 16-28. (20 min.)Variable Cost Variances: Sills, Inc. Direct labor: Actual Costs Price Variance Actual Inputs at Standard Price Flexible Budget (Standard Efficiency Inputs Allowed Variance for Good Output) $20.25a x 27,000 = $546,750 $546,000 19,500 = $526,500 $546,000 $19,500 U $20,250 F Variable overhead: $5.25 x 26,000 = $136,500 $132,600 $3,900 F aStandard $5.25 x 27,000 = $141,750 $5,250 F labor wage rate = (Actual Direct Labor Direct Labor Price Variance) Actual hours worked = ($546,000 $19,500) 26,000 hrs. = $20.25 16- 14 Chapter 16 - Fundamentals of Variance Analysis 16-29. (20 min.)Variable Cost Variances: Simon Company. Direct labor: Actual Costs Price Variance Actual Inputs at Standard Price Flexible Budget (Standard Efficiency Inputs Allowed Variance for Good Output) $20a x 1.5 x 60,000 = $1,800,000 $20a x 92,000 = $1,840,000 $1,975,000 $135,000 U $40,000 U Variable overhead: $200,000 F aStandard $30 x 1.5 x 60,000 = $2,700,000 $30 x 92,000 = $2,760,000 $2,560,000 $60,000 U labor wage rate = [(Direct labor efficiency variance) Variable overhead efficiency variance)] x $30. = [$40,000 $60,000] x $30 = $20 16- 15 Chapter 16 - Fundamentals of Variance Analysis 16-30. (15 min.)Variable Cost Variances: Thurmster Corporation. a. Actual Costs Price Variance Actual Inputs at Standard Price Efficiency Variance $12.60 x 7,500 = $94,500 $98,550 $4,050 U Flexible Budget (Standard Inputs Allowed for Good Output) $89,775 $4,725 U Report to management: The total variance from the flexible budget is $8,775 unfavorable. This variance was caused by higher than expected prices ($4,050) and the use of more units than expected ($4,725). b. Work-in-Process Inventory.................................. 89,775 Materials Price Variance..................................... 4,050 Materials Efficiency Variance.............................. 4,725 Accounts Payable.............................. 98,550 To record the purchase and use of 7,500 units of materials at an actual cost of $98,550 and the transfer to work in process at a standard cost of $12.60 per unit. 16- 16 Chapter 16 - Fundamentals of Variance Analysis 16-31. (20 min.)Variable Cost Variances: Canyon Chemical. a. Actual Costs Price Variance Actual Inputs at Standard Price Efficiency Variance $22.50 x 28,800 = $648,000 $640,000 $8,000 F Flexible Budget (Standard Inputs Allowed for Good Output) $22.50 x 26,400 = $594,000 $54,000 U b. Work-in-Process Inventory.................................. 594,000 Materials Efficiency Variance.............................. 54,000 Materials Price Variance.............................. 8,000 Accounts Payable........................................ 640,000 To record the purchase and use of 28,800 gallons of chemical Y at an actual cost of $640,000 and the transfer to work in process at a standard cost of $22.50 per gallon. 16- 17 Chapter 16 - Fundamentals of Variance Analysis 16-32. (20 min.)Fixed Cost Variances: Carney Co. Actual Costs Price Variance $385,500 Budget Production Volume Variance $369,000 $16,500 U $360,000 $9,000 U $25,500 U 16-33. (15 min.) Fixed Cost Variances: Carney Co. 16- 18 Applied Chapter 16 - Fundamentals of Variance Analysis 16-34. (20 min.)Fixed Cost Variances: Hilo Corporation. Actual Costs Price Variance $390,660 Budget Production Volume Variance $3.30 x 128,000 = $422,400 $407,160 $16,500 F $15,240 F $31,740 F 16- 19 Applied Chapter 16 - Fundamentals of Variance Analysis 16-35. (20 min.) Fixed Cost Variances: Stoker Corporation. Actual Costs $413,000 Price Variance Budget Production Volume Variance $0.50 x 800,000b = $400,000 $0.50 x 806,000a $403,000 c $10,000 U Applied $3,000 U $13,000 F a. Budgeted volume = $403,000 $0.50 per unit = 806,000 units. b. Overhead applied = Budgeted overhead Production volume variance = $403,000 $3,000 = $400,000. Actual volume = $400,000 $0.50 per unit = 800,000 units. c. Actual fixed overhead = Budgeted overhead + Overhead price variance = $403,000 + $10,000 = $413,000 16- 20 Chapter 16 - Fundamentals of Variance Analysis 16-36. (45 min.)Comprehensive Cost Variance Analysis: Wagner, Inc. a. Variable cost: Direct materials: (AP x AQ) (SP x AQ) Flexible Budget (Standard Inputs Allowed for Good Output) (SP x SQ) $2.70 x 192,000 = $518,400 $3.00 x 192,000 = $576,000 $3 x 4 lbs x 46,000 = $552,000 Actual Costs Price Variance Actual Inputs at Standard Price $57,600 F Efficiency Variance $24,000 U Direct labor: $13.80 x 35,200 = $485,760 $13.50 x 0.8 hrs x 46,000 = $496,800 $13.50 x 35,200 = $475,200 $10,560 U $21,600 F Variable overhead: $15 x 8,640 = $129,600 $132,192 $2,592 U $15 x 0.18 hrs x 46,000 = $124,200 $5,400 U 16- 21 Chapter 16 - Fundamentals of Variance Analysis 16-36. (continued) b. Fixed overhead variances: Actual Costs Price Variance $1,075,000 Budget Production Volume Variance $20 x 46,000 = $920,000 $1,000,000 $75,000 U $80,000 U $155,000 U 16- 22 Applied Chapter 16 - Fundamentals of Variance Analysis 16-36. (continued) c. Record Costs Direct materials: Work-in-Process Inventory.................................. 552,000 Materials Efficiency Variance.............................. 24,000 Materials Price Variance 57,600 .................................................... Accounts Payable 518,400 .................................................... Direct labor: Work-in-Process Inventory.................................. 496,800 Direct Labor Price Variance................................ 10,560 Direct Labor Efficiency Variance 21,600 ....................................................... Accounts Payable 485,760 ....................................................... Variable overhead: Work-in-Process Inventory.................................. Variable Overhead Applied ........................................................ 124,200 124,200 Variable Overhead (Actual)................................. Miscellaneous Payables and Inventory Accounts................................................. 132,192 Variable Overhead (Applied)............................... Variable Overhead Price Variance...................... Variable Overhead Efficiency Variance.............. Variable Overhead (Actual) .................................................. 124,200 2,592 5,400 132,192 132,192 Fixed overhead: Work-in-Process Inventory.................................. Fixed Overhead Applied ........................................................ 920,000 920,000 Fixed Overhead (Actual)..................................... Miscellaneous Payables and Inventory Accounts 1,075,000 16- 23 1,075,000 Chapter 16 - Fundamentals of Variance Analysis ....................................................................... Fixed Overhead (Applied)................................... Fixed Overhead Production Volume Variance.... Fixed Overhead Price Variance.......................... Fixed Overhead (Actual) ........................................................ 16- 24 920,000 80,000 75,000 1,075,000 Chapter 16 - Fundamentals of Variance Analysis 16-36. (continued) Transfer to Finished Goods Finished Goods Inventory............................................ Work-in-Process Inventory............................. 2,093,000 2,093,000 Record the sale of 46,000 tires at $60. Accounts Receivable.................................................... 2,760,000 Sales Revenue 2,760,000 ........................................................................... Cost of Goods Sold...................................................... 2,093,000 Finished Goods Inventory 2,093,000 ........................................................................... Record the disposition of variances. Cost of Goods Sold........................................................... Materials Price Variance................................................... Direct Labor Efficiency Variance....................................... Materials Efficiency Variance............................. Direct Labor Price Variance............................... Variable Overhead Price Variance.................... Variable Overhead Efficiency Variance............. Fixed Overhead Price Variance......................... Fixed Overhead Production Volume Variance. . To close the variance accounts to Cost of Goods Sold. 118,352 57,600 21,600 24,000 10,560 2,592 5,400 75,000 80,000 Total cost of goods sold is $2,211,352 (= $2,093,000 + $118,352). Total actual costs are $2,211,352 (= $518,400 + 485,760 +132,192 + $1,075,000). 16- 25 Chapter 16 - Fundamentals of Variance Analysis 16-37. (30 min.)Comprehensive Cost Variance Analysis: Pueblo Service. a. Variable cost variances: Oil specialist: (AP x AQ) (SP x AQ) Flexible Budget (Standard Inputs Allowed for Good Output) (SP x SQ) $13 x 79,200a = $1,029,600 $12 x 79,200 hrs = $950,400 $12 x 66,000b = $792,000 Actual Costs Price Variance Actual Inputs at Standard Price $79,200 U Efficiency Variance $158,400 U Variable overhead: $7.5 x 0.14 hrs x 396,000 = $415,800 $8 x 0.14 hrs x 396,000 = $443,520 $27,720 F a 79,200 = 1/6 hour x 396,000 changes. c 49,500 $47,520 U = 0.20 hours x 396,000 changes. b 66,000 $8 x 49,500 hoursc = $396,000 = 0.125 hour x 396,000 changes. 16- 26 Chapter 16 - Fundamentals of Variance Analysis 16-37. (continued) b. Fixed overhead variances: Actual Costs Price Variance $500,000 Budget Production Volume Variance $1.20 x 396,000 = $475,200 $432,000 $68,000 U $43,200 F $24,800 U 16- 27 Applied Chapter 16 - Fundamentals of Variance Analysis 16-38. (20 min.)Overhead Variances: Three Bridges, Inc. Variable overhead: (AP x AQ) (SP x AQ) Flexible Budget (Standard Inputs Allowed for Good Output) (SP x SQ) $456,000 $36 x 13,200 = $475,200 $36 x 14,000 = $504,000 Actual Costs Price Variance Actual Inputs at Standard Price $19,200 F Efficiency Variance $28,800 F Fixed overhead: Actual Costs Price Variance Budget $182,400 $187,200 $4,800 F 16- 28 Chapter 16 - Fundamentals of Variance Analysis Solutions to Problems 16-39. (30 min.)Solve for Master Budget Given Actual Results: Gibson Corporation. a. Master Budget Computations Sales volume.......................................................nits 108,000 u Sales revenue..................................................... $540,000 Variable costs: Manufacturing.................................................. 106,000 Marketing and administrative........................... 54,000 Contribution margin............................................. $ 380,000 Fixed costs: Manufacturing.................................................. 216,000 Marketing and administrative........................... 56,000 Operating profit.................................................... $ 108,000 16- 29 108,000 units x $5 $540,000 $54,000 $380,000 10% x $540,000 (given) $2 x 108,000 units $380,000 $216,000 $108,000 $1 x 108,000 units Chapter 16 - Fundamentals of Variance Analysis 16-39. (continued) b. Marketing Actual Manuand Adminis- Sales Price (120,000 facturing trative Variance Units) Variances Variances Sales revenue..................................................... $672,000 $72,000 F Variable costs: Manufacturing..................................................U 147,200 $29,422 Marketing and admin....................................... 61,400 ________ $1,400 U ________ Contribution margin.............................................U $463,400 $29,422 $ 1,400 U $72,000 F Fixed costs: Manufacturing.................................................. F 205,000 11,000 Marketing and admin....................................... 113,200 ________ 57,200 U ________ Operating profit....................................................U $145,200 $18,422 $58,600 U $72,000 F a 120,000 Flexible Budget (120,000 Units) $600,000a $60,000 F Master Budget (108,000 Units) $540,000 117,778d 60,000c $422,222b 11,778 U 6,000 U $42,222 F 106,000 54,000 $380,000 216,000 56,000 $150,222 $42,222 F 216,000e 56,000g $108,000f Sales Activity Variance units x $5 b $380,000 x 120,000 units 108,000 units c 10% x $600,000 d Solved after determining flexible budget sales revenue, contribution margin, and variable marketing and administrative. Also, $117,778 = $106,000 x (120,000 units 108,000 units). e $2 x 108,000. f $1 x 108,000. g $380,000 $216,000 $108,000. 16- 30 Chapter 16 - Fundamentals of Variance Analysis 16-40. (30 min.)Find missing data for profit variance analysis. Marketing & AdminisFlexible Master Actual Manutrative Sales Budget Sales Budget (1,500 facturing revenue..................................................... $78,000 $3,000 Variance Price 1,500a Activity (1,600 Units) Variance Variance Units) Variance Units) Sales Ub $81,000 $5,400 Uc $86,400d Variable manufacturing costs.............................. e $2,400 F 20,400 22,800f 1,520 F 24,320g Variable marketing and administrative................ h 8,000 $1,000 Fi 9,000j 600 Fk 9,600 Contribution margin............................................. $49,600 $2,400 Fl $1,000 Fm $3,000 Un $49,200o $3,280 Up $52,480q Note: See computations on next page. 16- 31 Chapter 16 - Fundamentals of Variance Analysis 16-40. (continued) (a) 1,500 units from actual column. (b) $3,000 U = $81,000 $78,000. (c), (d) Budgeted sales price per unit = $81,000 1,500 units = $54. Master budget = $54 x 1,600 units = $86,400 (d). Activity variance = $86,400 $81,000 = $5,400 U (c). (e), (f), (g) Budgeted variable manufacturing cost per unit = $1,520 (1,600 1,500 units) = $15.20. Flexible budget variable manufacturing costs = $15.20 x 1,500 units = $22,800(f) [= ($1,520 $5,400) x $81,000]. Master budget variable manufacturing costs = $15.20 x 1,600 units = $24,320 (g) [= ($1,520 $5,400) x $86,400]. Actual variable manufacturing costs = $22,800 $2,400 = $20,400 (e). (h) Variable marketing and administrative costs = $78,000 $20,400 $49,600 = $8,000. (i), (j), (k) Budgeted variable marketing and administrative costs per unit = $9,600 1,600 units = $6.00. Flexible budget marketing and administrative costs = $6.00 x 1,500 units = $9,000 (j). Variable marketing and admin. costs that are part of the activity variance = $6.00 x 100 units = $600 F (k) = $9,600 $9,000. Marketing and administrative cost variance = $9,000 $8,000 = $1,000 F (i). (l), (m), (n), (o), (p), and (q) are column totals. 16- 32 Chapter 16 - Fundamentals of Variance Analysis 16-41. (40 min.)Find Data for Profit Variance Analysis. Actual (based on actual sales volume) Manufacturing Variance Units.................................................................... 6,000 a Sales revenue..................................................... $24,750 g Less: Variable manufacturing costs....................................... U o 13,125 n $1,125 Variable marketing and administrative costs...................................... 2,700 Contribution margin............................................. U $8,925 q $1,125 Less: Fixed manufacturing costs.............................................................. F 2,875 r 250 Fixed marketing and administrative costs....................................... 2,250 Operating profits.................................................. U u $3,800 t $875 Master Flexible Budget Budget (based on Marketing and (based on budgeted Administrative Sales Price actual sales Sales Activity sales Variance Variance volume) Variance volume) $300 F p $300 F s $2,250 F x 1,000 F $3,750 F i 5,000 $18,750 12,000 $2,250 F 6,000 b $22,500 h 2,000 U j 10,000 3,000 $7,500 500 U $1,250 F k 3,125 m 375 U v $ 75 U w $2,250 F Note: See computations on next page. 16- 33 1,875 $2,500 2,500 c $6,250 3,125 d $1,250 F l 1,875 e $1,250 f Chapter 16 - Fundamentals of Variance Analysis 16-41. (continued) Computations: a. 6,000 units. b. 6,000 units. c. $2,500 d. $3,125 e. $1,875 f. $1,250 g. $24,750 h. $22,500 i. $3,750 F j. $2,000 U k. $1,250 F l. m. n. o. p. q. r. s. t. u. v. w. x. $1,250 F $3,125 $13,125 $1,125 U $300 F $8,925 $2,875 $300 F $3,800 $875 U $375 U $75 U $2,250 F see b. 5,000 units* + 1,000 F units. $18,750* $10,000* $6,250*. Same as m. Fixed costs in master budget are the same as the fixed costs in the flexible budget. $6,250* $3,125 (d) $1,875 (e). $22,500 (h) + $2,250*. 6,000 units (b) x ($18,750* 5,000 units*). Alternative computation: $12,000* + $3,000* + $7,500*. $22,500 (h) $18,750*. Alternative computation: 1,000 F units* x $3.75 selling price (= $18,750 5,000 units). $12,000* $10,000*. $7,500* $6,250*. Alternative computation: $3,750 F (i) $2,000 U (j) $500 U*. Same as k. $7,500* $1,875* $2,500*. $12,000* + $1,125 (o). Total manufacturing variance on the contribution margin line. $3,000* $2,700*. $24,750 (g) $13,125 (n) $2,700*. $3,125 (m) $250 F*. Same as p. $8,925 (q) $2,875 (r) $2,250*. $1,125 U* $250 F*. $2,250* $1,875*. $300 F (s) $375 U (v). Sales price variance. *Given 16- 34 Chapter 16 - Fundamentals of Variance Analysis 16-42. (20 min.)Ethical Issues In Managing Reported Profits: Doak Industries. Ray is trying to improve the profit on next years income statement. He knows that a revised budget to reflect changes in product lines might make it harder to get a bonus next year. Since he has reached a plateau on this years bonus, anything he can do to increase next years profit will help him get a bonus next year. This is an unethical practice. Ray must perform his professional duties with competence. He must prepare reports in accordance with technical standards and generally accepted accounting principles. Revenues and expenses must be matched to the correct period to which they belong. Ray faces a conflict of interest between communicating information fairly and objectively and achieving high bonuses. He should meet with his superiors, point out the conflict, and try to change the incentive system. If this is not possible, he should communicate his performance truthfully. 16- 35 Chapter 16 - Fundamentals of Variance Analysis 16-43. (20 min.)Prepare Flexible Budget: Tolstoy Corporation. Flexible Budgeta Calculations Sales revenue..................................................... $60,000 x (360 400) $54,000 Variable costs: Manufacturing costs Direct labor.................................................... 9,000 x (360 400) 8,100 Materials........................................................ 8,400 x (360 400) 7,560 Variable overhead......................................... 6,000 x (360 400) 5,400 Marketing......................................................... 3,600 x (360 400) 3,240 Administrative.................................................. 3,000 x (360 400) 2,700 Total variable costs............................................. $27,000 Contribution margin............................................. $27,000 Less fixed costs: ................................................. Manufacturing................................................ 3,000 Marketing....................................................... 6,000 Administrative................................................ 6,000 Total fixed costs.................................................. $15,000 Operating profit.................................................... $12,000 revenue and the variable costs are 90 percent (360 units 400 units x 100%) of the master budget amounts. a Sales 16- 36 Chapter 16 - Fundamentals of Variance Analysis 16-44. (20 min.)Sales Activity Variance: Tolstoy Corporation. Flexible Budget (based on actual of 360 units) Sales Activity Variance Sales revenue..................................................... $54,000 Less variable costs: Manufacturing costs: Direct labor................................................... 8,100 Materials....................................................... 7,560 Variable overhead........................................ 5,400 Marketing......................................................... 3,240 Administrative.................................................. 2,700 Total variable costs............................................. $27,000 Contribution margin............................................. $27,000 Less fixed costs: Manufacturing.............................................. 3,000 Marketing..................................................... 6,000 Administrative............................................... 6,000 Total fixed costs.................................................. $15,000 Operating profits.................................................. $12,000 16- 37 Master Budget (based on budgeted 400 units) $6,000 U $60,000 900 F 840 F 600 F 360 F 300 F $ 3,000 F $ 3,000 U 9,000 8,400 6,000 3,600 3,000 $30,000 $30,000 -0-0-0-0$3,000 U 3,000 6,000 6,000 $15,000 $15,000 Chapter 16 - Fundamentals of Variance Analysis 16-45. (30 min.) Profit variance analysis: Tolstoy Corporation. Actual (360 Units) Manufacturing Variance Sales revenue..................................................... $55,200 Variable costs: Manufacturing Direct labor................................................... U 8,520 $420 Materials....................................................... F 7,200 360 Overhead..................................................... F 4,920 480 Marketing......................................................... 3,180 Administrative.................................................. 3,000 Contribution margin............................................. F $28,380 $420 Fixed costs: Manufacturing.................................................. F 2,916 84 Marketing......................................................... 6,240 Administrative.................................................. 5,976 Operating profit.................................................... F $13,248 $504 Marketing & Administrative Sales Price Variance Variance Flexible Sales Budget Activity (360 Units) Variance Master Budget (400 Units) $1,200 F $60 F 300 U $240 U 240 U 24 F $456 U 16- 38 $54,000 $6,000 U $60,000 $1,200 F 8,100 7,560 5,400 3,240 2,700 $27,000 900 F 840 F 600 F 360 F 300 F $3,000 U 9,000 8,400 6,000 3,600 3,000 $30,000 $1,200 F 3,000 6,000 6,000 $12,000 $3,000 U 3,000 6,000 6,000 $15,000 Chapter 16 - Fundamentals of Variance Analysis 16-46. (20 min.)Prepare Flexible Budget: Hayden Corporation. Flexible Budgeta Sales revenue..................................................... $1,260,000 Variable costs: Manufacturing costs Direct labor.................................................... 126,000 Materials........................................................ 168,000 Variable overhead......................................... 168,000 Marketing......................................................... 52,500 Administration.................................................. 52,500 Total variable costs............................................. $567,000 Contribution margin............................................. $693,000 Less fixed costs: ................................................. Manufacturing................................................ 250,000 Marketing....................................................... 50,000 Administration................................................. 200,000 Total fixed costs.................................................. $500,000 Operating profit.................................................... $193,000 Calculations $1,200,000 x (21,000 20,000) 120,000 160,000 160,000 50,000 50,000 x x x x x (21,000 20,000) (21,000 20,000) (21,000 20,000) (21,000 20,000) (21,000 20,000) revenue and the variable costs are 105 percent (21,000 units 20,000 units x 100%) of the master budget amounts. a Sales 16- 39 Chapter 16 - Fundamentals of Variance Analysis 16-47. (20 min.)Sales Activity Variance: Hayden Corporation Flexible Budget (based on actual of 21,000 units) Sales Activity Variance Sales revenue..................................................... $60,000 F $1,260,000 Less variable costs: Manufacturing costs: Direct labor................................................... 126,000 6,000 U Materials....................................................... 168,000 8,000 U Variable overhead........................................ 168,000 8,000 U Marketing......................................................... 52,500 2,500 U Administration.................................................. 52,500 2,500 U Total variable costs............................................. $27,000 U $567,000 Contribution margin............................................. $ 33,000 F $693,000 Less fixed costs: Manufacturing.............................................. 250,000 -0Marketing..................................................... 50,000 -0Administration.............................................. 200,000 -0Total fixed costs.................................................. $500,000 -0Operating profits.................................................. $33,000 F $193,000 16- 40 Master Budget (based on budgeted 20,000 units) $1,200,000 120,000 160,000 160,000 50,000 50,000 $540,000 $660,000 250,000 50,000 200,000 $500,000 $160,000 Chapter 16 - Fundamentals of Variance Analysis 16-48. (30 min.) Profit variance analysis: Hayden Corporation. Actual (21,000 Units) Manufacturing Variance Sales revenue..................................................... $1,155,000 Variable costs: Manufacturing Direct labor................................................... U 147,000 $21,000 Materials....................................................... F 136,500 31,500 Overhead..................................................... F 158,500 9,500 Marketing......................................................... 51,000 Administration.................................................. 47,000 Contribution margin............................................. F $615,000 $20,000 Fixed costs: Manufacturing.................................................. U 256,000 6,000 Marketing......................................................... 57,000 Administration.................................................. 203,000 Operating profit.................................................... F $99,000 $14,000 Marketing & Administration Sales Price Variance Variance Flexible Budget (21,000 Units) Sales Activity Variance Master Budget (20,000 Units) $105,000 U $1,260,000 $60,000 F $1,200,000 $1,500 F 5,500 F $7,000 F $105,000 U 126,000 6,000 U 168,000 8,000 U 168,000 8,000 U 52,500 2,500 U 52,500 2,500 U $693,000 $33,000 F 120,000 160,000 160,000 50,000 50,000 $660,000 7,000 U 3,000 U $3,000 U $105,000 U 250,000 50,000 200,000 $193,000 $33,000 F 250,000 50,000 200,000 $160,000 16- 41 Chapter 16 - Fundamentals of Variance Analysis 16-49. (15 min.) Direct Materials: Clearwater Company. Actual Costs Price Variance Actual Inputs at Standard Price $20 x 900 =$18,000 AP x 900 $7,200 F 900 x AP AP = $18,000 $7,200 = $12 16- 42 Chapter 16 - Fundamentals of Variance Analysis 16-50. (20 min.)Solve for Direct Labor Hours: Thomas Company. Set up variance model: Actual Costs Price Variance $21.60 x AQ Actual Inputs at Standard Price Efficiency Variance $21.00 x 5,600 = $117,600 $21.00 x AQ ?? $16,800 F Solve for actual input at standard prices: $117,600 $16,800 favorable efficiency variance = $100,800. Solve for AQ: $21.00 x AQ = $100,800 AQ = $100,800 $21.00 AQ = 4,800 hours Solve for labor price variance: Labor price variance = ($21.60 x 4,800 hours) $100,800 = $103,680 $100,800 Labor price variance = $2,880 U 16- 43 Flexible Budget (Standard Inputs Allowed for Good Output) Chapter 16 - Fundamentals of Variance Analysis 16-51. (20 min.) Overhead Variances: Lima Parts, Inc. Variable overhead: Actual Costs Price Variance Actual Inputs at Standard Price Efficiency Variance $18 x 2,200 = $39,600 $39,200a $400 F Flexible Budget (Standard Inputs Allowed for Good Output) $18 x 2,350 = $42,300 $2,700 F Fixed overhead: Actual Costs Price Variance Budget $19,600b $17,280 $2,320 U a b $39,200 = (2/3) x $58,800. $19,600 = (1/3) x $58,800. 16- 44 Chapter 16 - Fundamentals of Variance Analysis 16-52. (40 min.)Manufacturing Variances: Clemson Company. Direct materials: (AP x AQ) (SP x AQ) Flexible Budget (Standard Inputs Allowed for Good Output) (SP x SQ) $5.40 x 4,200 gallons = $22,680 $6 x 4,200 gallons = $25,200 $6 x 2 gallons x 1,900 units = $22,800 Actual Costs Price Variance Actual Inputs at Standard Price $2,520 F Efficiency Variance $2,400 U Direct labor: $30 x 6,400 = $192,000 $24 x 6,400 = $153,600 $38,400 U $24 x 4 hours x 1,900 = $182,400 $28,800 F Variable overhead: $6 x 6,400 = $38,400 $54,000 $15,600 U $6 x 4 hours x 1,900 = $45,600 $7,200 F 16- 45 Chapter 16 - Fundamentals of Variance Analysis 16-53. (20 min.) Overhead Cost and Variance Relationships: Fargo Corporation. a. Variable overhead: Actual Costs Price Variance Actual Inputs at Standard Price $12a x 21,200 hours = $254,400 $254,000 $400 F a $12 = b. Flexible Budget (Standard Inputs Allowed for Good Output) $12 x 21,400 hours = $256,800 $2,400 F $256,800 flexible budget 21,400 hours Fixed overhead: Actual Costs Price Variance $180,800a Budget = $434,800 $254,000 b $184,800 = $180,800 + $4,000 F price variance. = $184,800 22,000 hours 16- 46 Applied $8.40c x 21,400 = $179,760 $5,040 U a $180,800 $8.40 Production Volume Variance $184,800b $4,000 F c Efficiency Variance Chapter 16 - Fundamentals of Variance Analysis 16-54. (20 min.) Analysis of Cost Reports: Cabot Plant. Three possible changes that could make the cost information more meaningful are: a. Use a flexible budget rather than a static master budget for measuring performance so that changed conditions, volume changes, and fixed versus variable costs are recognized in the reporting process. b. Use standard costs. c. Identify those elements of the report for which the production manager is directly responsible. 16-55. (25 min.)Change Of Policy To Improve Productivity: Osage Electronics. Currently the soldering personnel rarely complete the operations in less time than the standard allows. Assuming that the soldering department is working efficiently, it is not likely that the tightening of the standards (reducing the allowed time per operation) will result in increased productivity. More likely the soldering personnel will resent having the standards tightened without their input into the decision making process. They currently view the standards as achievable since they do, although rarely, complete the operations in less than the standard time. Tightening the standards will result in decreased motivation and morale as they strive for what they will view as an unrealistic standard. Improved profit margins will not be achieved. The production manager fails to understand that by tightening the standards (all other things being equal) she will simply increase the unfavorable variances. Simply lowering the standard time allowed per operation does not reduce the cost of manufacturing the product, unless an actual reduction in processing time occurs on the shop floor. As stated above the tightening of the standards will probably decrease morale and motivation resulting in an increased processing time. This will decrease productivity and increase the costs of production. 16-56. (20 min.)Ethics and Standard Costs: Farmer Franks. Margaret's behavior is unethical. Margaret has an obligation to communicate information fairly and objectively. She must prepare complete and clear reports and recommendations. By misrepresenting the costs of the blueberries she is hoping to benefit her friend's blueberry farm at the expense of Farmer Franks. Margaret should avoid such conflicts of interest, and advise all parties of any potential conflicts. She should not be setting the standards and mandating from whom Franks should purchase the goods. 16- 47 Chapter 16 - Fundamentals of Variance Analysis 16-57. (40 min.) Comprehensive Variance Problem: Trenton Manufacturing Company. Direct materials: (AP x AQ) (SP x AQ) Flexible Budget (Standard Inputs Allowed for Good Output) (SP x SQ) $6.15 x 9,500 yards = $58,425 $6.00 x 9,500 yards = $57,000 $6.00 x 20 yards x 500 units = $60,000 Actual Costs Price Variance Actual Inputs at Standard Price $1,425 U Efficiency Variance $3,000 F Direct labor: $5.10 x 12,600 hours = $64,260 $5 x 25 hours x 500 units = $62,500 $5 x 12,600 hours = $63,000 $1,260 U $500 U 16- 48 Chapter 16 - Fundamentals of Variance Analysis 16-57. (continued) Variable overhead: Actual Inputs at Standard Price $3a x 12,600 hours = $37,800 ?? Flexible Budget Efficiency (Standard Inputs Variance Allowed for Good Output) $3 x 25 hours x 500 units = $37,500 $300 U Fixed overhead: Budget Production Volume Variance $1b x 14,400 hours = $14,400 ?? Applied $1 x 25 hours x 500 units = $12,500 $1,900 U a $3 per hour = $75 standard overhead per unit 25 direct labor hours per unit. b $1 per hour = $25 standard overhead per unit 25 direct labor hours per unit. Note: The variable overhead and fixed overhead price variances cannot be determined. The total overhead price variance is $3,300 U (= $55,500 $37,800 $14,400). 16- 49 Chapter 16 - Fundamentals of Variance Analysis 16-58. (25 min.)Find Actual And Budget Amounts From Variances: Timekiller, Inc. a. Direct materials: Actual Costs Price Variance Actual Inputs at Standard Price (AP x AQ) (SP x AQ) $472,500* Efficiency Variance Flexible Budget (Standard Inputs Allowed for Good Output) (SP x SQ) $4* x 112,500 kgs* = $450,000 $22,500 U* $4* x 4.5 kgs x 24,000 units* = $432,000 $18,000 U* Direct labor: $16.80 x 17,100* hours = $287,280* $16 x 0.75 hours x 24,000 units = $288,000 $16 x 17,100* hours = $273,600 $13,680 U* $14,400 F Standard cost sheet: Direct materials, 4.5 kilograms at $4 per kilogram. Direct materials, 0.75 hours at $16 per hour.......... Overhead, 0.75 hours at $12 per hour................... Total costs......................................................... * Given 16- 50 $18 12 9 $39* per game per game per game per game Chapter 16 - Fundamentals of Variance Analysis 16-58. (continued) b. Overhead: Actual Costs Applied $216,000 + $9,000 = $225,000 $9 x 24,000 = $216,000 $9,000 U* * Given 16- 51 Chapter 16 - Fundamentals of Variance Analysis 16-59. (40 min.)Variance Computations With Missing Data: Studio Company. Note: The calculation of the fixed overhead budget amount makes this a challenging problem. (Footnotes follow the calculations.) Direct materials: (AP x AQ) (SP x AQ) Flexible Budget (Standard Inputs Allowed for Good Output) (SP x SQ) $1.85a x 81,600 gallons =$150,960 $1.65 x 81,600 gallons = $134,640 $1.65 x 2 gallons x 42,000 units = $138,600 Actual Costs Price Variance Actual Inputs at Standard Price $16,320 U Efficiency Variance $3,960 F Direct labor: $13.05b x 8,560 hours = $111,708 $14 x 0.2 hours x 42,000 units = $117,600 $14 x 8,560 hours = $119,840 $8,132 F $2,240 U Variable overhead: $11.90 x 0.2 hours x 42,000 units = $99,960 $11.90 x 8,560 hours = $101,864 61% x $163,200 = $99,552 $2,312 F $1,904 U 16- 52 Chapter 16 - Fundamentals of Variance Analysis 16-59. (continued) Fixed overhead: Actual Costs Price Variance 39% x $163,200 = $63,648 Budget Production Volume Variance $1.60d x 42,000 = $67,200 $64,000c $352 F a $1.85 = = $3,200 F $150,960 81,600 gallons b $13.05 Applied $111,708 8,560 hours c There are 40,000 units in the master production budget, computed by dividing total master budget costs by standard unit cost as follows: Materials: 132,000 ($1.65 x 2 gallons) = $132,000 $3.30 = 40,000 units. Labor: $112,000 ($14.00 x 0.2 hour) = $112,000 $2.80 = 40,000 units. This means the master budget variable overhead amount is $95,200 = $11.90 x 0.2 hour x 40,000 units. So the fixed overhead budget is $64,000 = $159,200 $95,200. d $1.60 = $64,000 budget 40,000 units 16- 53 Chapter 16 - Fundamentals of Variance Analysis (50 min.) Comprehensive Variance Problem: Sweetwater Company 16-60. Mountain Mist: a. Direct materials: (AP x AQ) (SP x AQ) Flexible Budget (Standard Inputs Allowed for Good Output) (SP x SQ) $13.50 x 3,100 ounces =$41,850 $15 x 3,100 ounces = $46,500 $15 x 3 ounces x 1,000 units = $45,000 Actual Costs Price Variance Actual Inputs at Standard Price $4,650 F Efficiency Variance $1,500 U Direct labor: $60.75 x 4,900 hours = $297,675 $60 x 5 hours x 1,000 units = $300,000 $60 x 4,900 hours = $294,000 $3,675 U $6,000 F Variable overhead: $48 x 5 hours x 1,000 units = $240,000 $48 x 4,900 hours = $235,200 $242,550 $7,350 U $4,800 F 16- 54 Chapter 16 - Fundamentals of Variance Analysis 16-60. (continued) b. Fixed overhead: Actual Costs Price Variance $313,950 Budget $43,740 U 5,000 hours allowed = 1,000 units produced x 5 hours per unit. 16- 55 Applied ($335,340 5,750) x 5,000a = $291,600 $335,340 $21,390 F a Production Volume Variance Chapter 16 - Fundamentals of Variance Analysis 16-60. (continued) Valley Stream: a. Direct materials: (AP x AQ) (SP x AQ) Flexible Budget (Standard Inputs Allowed for Good Output) (SP x SQ) $17.25 x 4,700 ounces =$81,075 $16.50 x 4,700 ounces = $77,550 $16.50 x 4 ounces x 1,200 units = $79,200 Actual Costs Price Variance Actual Inputs at Standard Price $3,525 U Efficiency Variance $1,650 F Direct labor: $76.50 x 7,400 hours = $566,100 $75 x 6 hours x 1,200 units = $540,000 $75 x 7,400 hours = $555,000 $11,100 U $15,000 U Variable overhead: $52.50 x 6 hours x 1,200 units = $378,000 $52.50 x 7,400 hours = $388,500 $378,510 $9,990 F $10,500 U 16- 56 Chapter 16 - Fundamentals of Variance Analysis 16-60. (continued) b. Fixed overhead: Actual Costs Price Variance $396,000 Budget $30,600 U 7,200 hours allowed = 1,200 units produced x 6 hours per unit. 16- 57 Applied ($397,800 7,800) x 7,200a = $367,200 $397,800 $1,800 F a Production Volume Variance Chapter 16 - Fundamentals of Variance Analysis Integrative Case 16-61. (60 min to 90 min) Performance Measurement and Variances: agm.com. a. The following variances can be computed to understand better why actual income fell short of budgeted income. Factor: Initial income variance......................................... ($88,760 $6,800)] Sales variances Price variance................................................. $25) $176,000 (8,000 Volume variance............................................. Total sales variance.................................. 81,960 U 24,000 U 0 24,000 U Production cost variances Price variances Reed.......................................................... $5) $11,520 (2,400 Handle....................................................... $4.10) $31,200 (8,000 Labor......................................................... $12) $65,280 (4,800 Efficiency variances Reed.......................................................... .4)] $5 [2,400 (8,000 Labor......................................................... .5 )] $12 (4,800 (8,000 Variable overhead Spending................................................... $1) $5,760 (4,800 Efficiency................................................... .5)] x $1 [4,800 (8,000 Fixed overhead ............................................. Marketing variance.............................................. Total variances............................................ 16- 58 480 F 1,600 F 7,680 U 5,600 U 4,000 F 9,600 U 5,600 U 960 U 800 U 1,760 U 0 45,000 U $81,960 U Chapter 16 - Fundamentals of Variance Analysis 16-61. (continued) b. The two specific items in the case that deal directly with this are the material savings and the strike. The estimated cost of the strike can be computed as: Lost sales............................................................ 400 baskets x $12.40 (budgeted contribution margin) Shipping............................................................... Marketing............................................................. Total.................................................................. $ 4,960 13,000 32,000 $49,960 We can think about including lost sales even though she sold the planned 8,000. She might have been able to sell (and produce) more if there was no strike. The materials savings of $8,000 (= 20% $5 8,000 units) are already incorporated in the total material efficiency variance. There is no reason she should receive credit for these and not be held responsible for the other efficiency losses. c. Certainly Mary is not responsible (in the sense of control) for the strike. However, she is responsible for designing operations and selecting suppliers. Strikes are not unknown and if she is not held accountable for the effect of strikes (or fires, or floods, etc.), she will not include the possible costs in her decisions. Should the contract be re-negotiated? This is a much more difficult question. There are (at least) two factors that need to be considered here. First, since this is the first year of operations, the budget against which Mary is evaluated is subject to a great deal of uncertainty. That is, the benchmark might have been wrong. On the other hand, if the contract is re-negotiated for this event, how effective can the budget be in the future? 16- 59

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Alexandria Technical College - UKY - 10
UNIVERSIDAD TECNOLGICA DEQUERTAROLISTA DE COTEJOASIGNATURA:Martn Avilez MartnezHerramientas InformticasACTIVIDAD :PERIODO: SEP-DIC'12No.EVALUACIN: 3REACTIVOSNo.NOMBRE DEL ALUMNOEQPrcticas de Excel12345678910121314151617AGUILA
Alexandria Technical College - UKY - 10
voluntad-conocimiento-servicioProcesos IndustrialesGrupo:PI 17Asignatura:Herramientas de la informticaProfesor:Ing. Martn Avilez MartnezTrabajo de investigacin:Curriculum vitaeAlumno:Hugo Enrique Hernndez AboytesCurriculum VitaeDatos Acadmico
Alexandria Technical College - UKY - 10
voluntad-conocimiento-servicioProcesos IndustrialesGrupo:17-IPAsignatura:Herramientas de la informticaProfesor:Ing. Martn Avilez MartnezTrabajo de investigacin:Curriculum vitaeAlumno:Pedro Fernando Prez RojasCurriculum VitaeDatosAcadmicosEsc
Alexandria Technical College - UKY - 10
SOLUCIONES ABOYTESREPORTE DE PRODUCCIONTRIMESTRE 1LINEA DE PRODUCCION DE SOFTWARECUOTA DE GASTOSCLAVE DE PARTE ENEROFEBRERO MARZOTOTAL TRIMESTRE COSTO UNITARIO COSTO TOTAL GASTOSK-15265847895902323502K-15659877623896622576K-69862237413
Alexandria Technical College - UKY - 10
EmpresaOrganizacin industrialPI-1727 de Noviembre del2012S.AdeR.L.FiguraJurdicaS.A.deR.L. (Sociedad Annima deResponsabilidadLimitada)Caractersticas.Mnimo2sociosEs una combinacin de recursos con un fincomnEsdecarctereconmicoycomercialVentajas
Alexandria Technical College - UKY - 10
Universidad Tecnolgica de QuertaroVoluntad Conocimiento ServicioProcesos industrialesERP (Enterprice Resource Planning)Grupo:PI-17Asignatura:Herramientas InformticasNombre:Gonzlez Rodrguez Karen Fernanda.Hernndez Aboytes Hugo Enrique.Loredo Gar
Alexandria Technical College - UKY - 10
ERC (Planeacin de Recursos Empresariales)INTRODUCCIONERP son las siglas de entreprise resource planning o planeacin de recursos de la empresa;sus orgenes se remontan a la Segunda Guerra Mundial. El gobierno estadounidense empleoprogramas especializado
Alexandria Technical College - UKY - 10
TABLA DE CONTENIDOTABLA DE CONTENIDO. 2MANUFACTURA ESBELTA: PROPUESTAS DE MEJORA AL PROCESO PRODUCTIVO DE UNAEMPRESA DEDICADA A LA ELABORACION Y COMERCIALIZACIN DE FRITURAS. 3RESUMEN. 3DESARROLLO. 3ANTECEDENTES. 41. DEFINIR ESPECIFICACIONES DEL PRO
Alexandria Technical College - UKY - 10
MISION:Lleva a nuestros socios el conocimiento einnovacin local y la capacidad de hacercrecer el valor a travs de nuestra redinternacional, proporcionar un ambientede trabajo que fomente el trabajo enequipo, motive a nuestros empleados aque produzc
Alexandria Technical College - UKY - 10
ERC (Planeacion de Recursos Empresariales)INTRODUCCIONERP son las siglas de entreprise resource planning o planeacin de recursos de la empresa;sus orgenes se remontan a la Segunda Guerra Mundial. El gobierno estadounidense empleoprogramas especializad
Alexandria Technical College - UKY - 10
CUESTIONARIO1.- Para que son usadas las lainas?Las lainas son utilizadas para medir pequeas aberturas o ranuras. Estos medidoresconsisten en laminas delgadas que tienen marcado su espesor.2.- Cules son los rangos de espesores de las lainas?Existen ju
Alexandria Technical College - UKY - 10
CUESTIONARIO1.- Cules son las precauciones que se deben tomar en cuenta cuando medimos conmedidores de altura?Seleccionar el medidor de altura que mejor se ajuste a lo que vamos a medirNo aplicar fuerza excesiva al medidor de alturaUtilizar guantes p
Alexandria Technical College - UKY - 10
Universidad Tecnolgica de QuertaroVoluntad Conocimiento ServicioCaso Southwestern UniversityGrupo:PI-17Asignatura:Administracin de la produccinNombre:Fernando Prez Rojas.Hernndez Aboytes Hugo Enrique.Jess Manuel Dorantes Balderas.Jos Dolores Va
Alexandria Technical College - UKY - 10
No habr posadas en la carrera deprocesos industriales?A pesar de la crisis y las complicaciones econmicas se puede descartar lapoltica que no va haber posadas, hemos experimentado en los ltimosaos, segn docentes de la institucin no se hacen posadas. D
Alexandria Technical College - UKY - 10
Equipo 1Organizacin Industrial20 de Noviembre del 2012Evaluacin por ObjetivosProcesos IndustrialesPI-17ObjetivoEsla meta o nivel que sedebe alcanzar en unperiododetiempodeterminado.Evaluacion por objetivos Tambinconocido como AXO oadminis
Alexandria Technical College - UKY - 10
Alexandria Technical College - UKY - 10
Inaugura UTEQ Congreso Internacional de Mantenimiento IndustrialDepartamento de Prensa y DifusinDireccin de Difusin y Extensin UniversitariaQuertaro, Qro. A 24 de octubre de 2012Boletn Informativo BI170/2012Contribuyendo al fomento de una cultura cie
Alexandria Technical College - UKY - 10
voluntad-conocimiento-servicioProcesos IndustrialesGrupo:PI 17Asignatura:Propiedad de los materialesProfesor:Gerardo VergaraTrabajo de investigacin:Ensayo Una ojeada a la materiaAlumno:Hugo Enrique Hernndez AboytesCurriculum VitaeDatos Acadmi
Alexandria Technical College - UKY - 10
SE CUMPLIERON LOS OBJETIVOS DEL TALLER DE LEANMANUFACTORING.Esta persona es maestra de la Universidad Tecnolgica de Quertaro la cualasisti al Congreso e imparti el taller de Lean Manufactoring el da 29 deNoviembre, donde participaron alumnos de esta U
Emporia - ECON - 101
THE JOURNAL OF FINANCE VOL. LXV, NO. 2 APRIL 2010Personal Bankruptcy and CreditMarket CompetitionASTRID A. DICK and ANDREAS LEHNERTABSTRACTWe document a link between U.S. credit supply and rising personal bankruptcy rates.We exploit the exogenous va
Emporia - ECON - 101
The Challenge of Resolving FutureClaims in BankruptcyMICHAEL DISTEFANOIt is common knowledge that the Bankruptcy Code provides adebtor with a fresh start by allowing it to discharge pre-petitionclaims. Similarly, Section 363 of the Bankruptcy Code al
Brown - INTL - 1350
IR Theory 11/09Globalization------buzzword of the 1990sa great defining feature of the post-Cold War worldflows of goods, people, capital, informationinterconnectedness, interdependenceno single definition of globalization, but 4 overlapping e
Montgomery - BA - 101
Carlos GarciaBA101FrazierBook reportBook Report PresentationGood to Great: Why Some Companies Make the Leap.and others dont byJim Collins was originally published in 2001. The book identifies and evaluates thefactors and variables that allow a smal
Montgomery - BA - 101
By Carlos GarciaInternational BusinessProject- El SalvadorBa 101 FrazierBackground Independence Date Civil War Currency Third largest economy in Central AmericaEl SalvadorBusiness ClimateThe coffee industry isdefinitely the majorbusiness stre
Montgomery - BA - 101
C&ADrycleaners5335WisconsinAvenueNorthwest,Washington,DC20015Owners:AmitojSinghCarlosGarciaExecutivesummaryC&ADrycleanersoffersthemostaffordablewaytoacquireprofessionaldrycleaningservices.Thecompanyspecializesindrycleaning,laundry,leatherandsued
Montgomery - BA - 101
Income Statementfor November 2012RevenueSales/Revenues$72,000Total Revenue$72,000Cost of Goods SoldStarting Inventory$3,000Less Ending Inventory$3,000Cost of Goods Sold$4,000Gross Profit$68,000Operating ExpensesRent$10,000Wages Expenses
Liberty - ACCT - 521
The current issue and full text archive of this journal is available atwww.emeraldinsight.com/1834-7649.htmThe design and implementationof activity-based costingActivity-basedcostingA case study of a Taiwanese textile companyRong-Ruey DuhDepartmen
Liberty - ACCT - 521
International Journal of Accounting and Financial ReportingISSN 2162-30822011, Vol. 1, No. 1Decisions Based on Synthesis Documents Informationof the ABC (Activity-Based Costing) MethodGary CokinsSAS Institute Inc.,Cary, North Carolina, USATel: 248
Liberty - ACCT - 521
LE HESAPLANAN MALYETLER LE MEVCUTMALYETLERN KARILATIRILMASI: MERMERLETMES RNEProf. Dr. Durmu ACAR*Yrd. Do. Dr. Hseyin DALAR*Yrd. Do. Dr. Osman AKIN*ZKreselleme ve teknolojinin gelimesine paralel ortaya kan ulusal veuluslar aras rekabette ne kan re
Liberty - ACCT - 521
YNTEM LE MTER KARLILIK ANALZ:SEYAHAT ACENTASI RNEK OLAYI*Dr. Veli Erdin REN*Prof. Dr. Nilfer TETK*ZHzla artan kresel rekabet ortamnda stnlk salamak isteyen iletmeler, sadece rn karlln deil mterilerin de karlln bilmek zorundadrlar. Mterilerin iletme k
Liberty - ACCT - 521
Energies 2013, 6, 425-443; doi:10.3390/en6010425OPEN ACCESSenergiesISSN 1996-1073www.mdpi.com/journal/energiesArticleDecisions on Energy Demand Response Option Contracts inSmart Grids Based on Activity-Based Costing andStochastic ProgrammingSeog-
Liberty - ACCT - 521
TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATIONActions Are Being Taken to Address theImpact That International FinancialReporting Standards Will Have on TaxAdministrationSeptember 8, 2010Reference Number: 2010-30-112This report has cleared the Tr
Liberty - ACCT - 521
The Activity-Based Costing Method:Development and ApplicationsGregory Wegmann*This paper analyzes the management accounting applications, which try to improvethe Activity-Based Costing (ABC) method. First, the paper describes them using theStrategic
Liberty - ACCT - 521
I.Understanding the Roles of Offer and Acceptance in the Formation of a Contract*What is an Acceptance? An acceptance is "a manifestation of assent to the terms [of the offer] made by the offeree in the manner invited or required by the offer." In deter
Liberty - ACCT - 521
The current issue and full text archive of this journal is available atwww.emeraldinsight.com/1176-6093.htmQRAM8,2The diffusion ofactivity-based costing inJordanian industrial companies180Mahmoud NassarApplied Science Private University, Amman, J
Liberty - ACCT - 531
71Journal of Expert Systems (JES)Vol. 1, No. 3, 2012Copyright World Science Publisher, United Stateswww.worldsciencepublisher.orgRelevance and Applicability of Activity Based Costing: AnAppraisalSarbapriya RayShyampur Siddheswari Mahavidyalaya Col
Liberty - ACCT - 531
University of UtahModern Congressional Election Theory Meets the 1992 House ElectionsAuthor(s): Sunil Ahuja, Staci L. Beavers, Cynthia Berreau, Anthony Dodson, Patrick Hourigan,Steven Showalter, Jeff Walz and John R. HibbingReviewed work(s):Source: P
Liberty - ACCT - 531
Liberty - ACCT - 531
Are university researchers at risk for patentinfringement?Amy Yancey & C Neal Stewart, JrAcademic researchers have regularly ignored patents on key technologies as a strategy to maneuver around patentthickets and freedom-to-operate issues, but they ma
Liberty - ACCT - 531
Dr. Emre Cengiz1*Prof. Dr. Ayten Ersoy2*ZETFaaliyet Tabanl Maliyetleme (FTM), faaliyetler, kaynaklarve maliyet objelerinin (rnler ve servisler gibi) maliyet veperformans lm iin bir toplam kalite ynetim aracdr.Yneticiler, FTM tarafndan elde edilen ma