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Unformatted text preview: Accounting 2102 Farmer Test 3 Short Answer Practice Problems Chapter 9 Question 1 A flexible budget for 20,000 hours revealed variable manufacturing overhead of $3 per hour and fixed manufacturing overhead of $2.50 per hour. Assume 10,000 hours is within the relevant range, calculate the total overhead budget for 10,000 hours. VC 10,000 x 3 = $30,000 FC 20,000 x 2.50 = $50,000 Total overhead budget = $30,000 + 50,000 = 80,000 Chapter 9 Question 2 The production team for Take Eight, Inc., a manufacturer of pillow top mattresses, recently prepared a manufacturing cost budget for an output of 50,000 mattresses, as follows: Direct Materials $100,000 Direct Labor 50,000 Variable Overhead 75,000 Fixed Overhead 100,000 Actual costs incurred during the production of 60,000 mattresses were; direct materials, $110,000; direct labor, $60,000; variable overhead, $100,000; and fixed overhead, $97,000. If Take Eight evaluated performance by the use of a flexible budget, determine the dollar amount of the variance and if the variance is favorable or unfavorable. variable manu costs = ($100,000+$50,000+$75,000)/50,000 mattresses = $4.50/mattress Actual at an output of 60,000 = ($110,000+$60,000+$100,000+$97,000) = $367,000 Budgeted at an output of 60,000 = $4.50/mattress x 60,000 mattresses + $100,000 = $370,000 actual cost is less than budgeted cost . . . so the variance is favorable in the amount of $3,000 1 Accounting 2102 Farmer Test 3 Short Answer Practice Problems Chapter 10 Question 1 Dont Make a Sound, Inc. sells infant sleeping apparel and infant bedding. The company operates two stores: Unplug the Phone and Cut Off the TV. Dont Make a Sound provides accounting services to each individual store. Related accounting costs are allocated to each store on the basis of total sales revenue and are controllable by the manager. For the quarter ended December 31, 2005, total combined sales revenue for both stores totaled $170,000 and total accounting costs for both stores totaled $25,000. The following information relates to Unplug the Phone: Sales Revenue $76,50 variable, controllable, traceable Cost of Goods Sold $22,00 variable, controllable, traceable Payroll Expense for Hourly Employees $25,00 variable, controllable, traceable Property Tax Expense $4,500 fixed, noncontrollable, traceable Depreciation Expense $1,250 fixed, noncontrollable, traceable Other Controllable Operating Expenses $2,000 variable, controllable, traceable allocation of accounting costs (variable, controllable, traceable) . . . = $76,500/$170,000 x $25,000 = $11,250 a. Calculate the figure on which Unplug the Phones store manager should be judged. 76,500-22,000-25,000-2,000-11,250 = 16,250 b. Calculate the figure on which Unplug the Phone should be judged (the store itself)....
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This note was uploaded on 05/26/2011 for the course ACCT 2102 taught by Professor Farmer during the Spring '08 term at University of Georgia Athens.
- Spring '08