chapter 11

chapter 11 - $ 48,000 $ Indirect material 3.00 24,000...

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1 Accounting 2102 Flexible Budgets (we will not cover Overhead Analysis) Chapter Eleven
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2 Accounting 2102 budgeting . . . Static Budget . . . one level of activity Flexible Budget . . . multiple levels of activity two uses 1. planning 2. performance evaluation let’s look at . . . Go Ahead and Jump, LLC
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3 Accounting 2102 Static Actual Budget Results Variances Machine hours 10,000 8,000 2,000 U Variable costs Indirect labor 40,000 $ 34,000 $ $6,000 F Indirect materials 30,000 25,500 4,500 F Power 5,000 3,800 1,200 F Fixed costs Depreciation 12,000 12,000 0 Insurance 2,000 2,050 50 U Total overhead costs 89,000 $ 77,350 $ $11,650 F Go Ahead and Jump, LLC static budget
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4 Accounting 2102 Preparing a Flexible Budget To a budget we need to know that: Total variable costs change in direct proportion to changes in activity. Total fixed costs remain unchanged within the relevant range. Fixed variable fixed
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5 Accounting 2102 Cost Total Formula Fixed 8,000 10,000 12,000 per Hour Cost Hours Hours Hours Machine hours 8,000 10,000 12,000 Variable costs Indirect labor 4.00 $ 32,000 $ 40,000
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Unformatted text preview: $ 48,000 $ Indirect material 3.00 24,000 30,000 36,000 Power 0.50 4,000 5,000 6,000 Total variable cost 7.50 $ 60,000 $ 75,000 $ 90,000 $ Fixed costs Depreciation 12,000 $ 12,000 $ 12,000 $ 12,000 $ Insurance 2,000 2,000 2,000 2,000 Total fixed cost 14,000 $ 14,000 $ 14,000 $ Total overhead costs 74,000 $ 89,000 $ 104,000 $ Flexible Budgets Go Ahead and Jump, LLC flexible budget . . . planning 6 Accounting 2102 Cost Total Formula Fixed Flexible Actual per Hour Cost Budget Results Variances Machine hours 8,000 8,000 Variable costs Indirect labor 4.00 $ 32,000 $ 34,000 $ Indirect material 3.00 24,000 25,500 Power 0.50 4,000 3,800 Total variable cost 7.50 $ 60,000 $ 63,300 $ 3,330 $ Fixed costs Depreciation 12,000 $ 12,000 $ 12,000 $ Insurance 2,000 2,000 2,050 50 Total fixed cost 14,000 $ 14,050 $ 50 $ Total overhead costs 74,000 $ 77,350 $ 3,350 $ Go Ahead and Jump, LLC flexible budget . . . performance report...
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chapter 11 - $ 48,000 $ Indirect material 3.00 24,000...

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