EXERCISE 10 - EXERCISE 10-1 TWYLA COMPANY Monthly Flexible...

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Unformatted text preview: EXERCISE 10-1 TWYLA COMPANY Monthly Flexible Manufacturing Overhead Budget For the Year 2005 Activity level Direct labor hours Variable costs Indirect labor ($1) Indirect materials ($.60) Utilities ($.40) Total variable costs ($2.00) Fixed costs Supervision Depreciation Property taxes Total fixed costs Total costs 7,000 $7,000 4,200 2,800 14,000 4,000 1,500 800 6,300 $20,300 8,000 $8,000 4,800 3,200 16,000 4,000 1,500 800 6,300 $22,300 9,000 $9,000 5,400 3,600 18,000 4,000 1,500 800 6,300 $24,300 10,000 $10,000 6,000 4,000 20,000 4,000 1,500 800 6,300 $26,300 EXERCISE 10-3 VINCENT COMPANY Monthly Flexible Selling Expense Budget For the Year 2005 Activity level Sales Variable expenses Sales commissions (6%) Advertising (4%) Traveling (3%) Delivery (2%) Total variable expenses (15%) Fixed expenses Sales salaries Depreciation Insurance Total fixed expenses Total expenses $170,000 $10,200 6,800 5,100 3,400 25,500 32,000 7,000 1,000 40,000 $65,500 $180,000 $10,800 7,200 5,400 3,600 27,000 32,000 7,000 1,000 40,000 $67,000 $190,000 $11,400 7,600 5,700 3,800 28,500 32,000 7,000 1,000 40,000 $68,500 $200,000 $12,000 8,000 6,000 4,000 30,000 32,000 7,000 1,000 40,000 $70,000 EXERCISE 10-6 (a) DUNHAM COMPANY Selling Expense Budget Report (Flexible) Clothing Department For the Month Ended October 31, 2005 Difference Favorable F Unfavorable U $ 100 U 150 F 600 F 700 F 1,350 F 0 U 0 U 0 U 0U 0U $1,350 F Sales in units Variable expenses Sales commissions ($.25) Advertising expense ($.10) Travel expense ($.55) Free samples ($.20) Total variable expenses ($1.10) Fixed expenses Rent Sales salaries Office salaries Depreciation--salesmen autos Total fixed expenses Total expenses Budget 10,000 $2,500 1,000 5,500 2,000 11,000 1,500 1,200 800 500 4,000 $15,000 Actual 10,000 $2,600 850 4,900 1,300 9,650 1,500 1,200 800 500 4,000 $13,650 (b) Shawn should not have been reprimanded. As shown in the flexible budget report, variable costs were $1,350 below budget. EXERCISE 10-11 (a) Controllable margin = ($3,000,000 $1,800,000 $600,000) = $600,000 ROI = $600,000 $5,000,000 = 12% (b) 1. Contribution margin percentage is 40%, or ($1,200,000 $3,000,000) Increase in controllable margin = $320,000 X 40% = $128,000 ROI = ($600,000 + $128,000) $5,000,000 = 14.6% ($600,000 + $100,000) $5,000,000 = 14% $600,000 ($5,000,000 $200,000) = 12.5% 2. 3. ...
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