work_at_home_soultions_ch15[1]

work_at_home_soultions_ch15[1] - Chapter 15 Performance...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 15 Performance Evaluation Chapter 15 Responsibility Accounting Exercise 15-1 Item to Classify Standard Actual Type of Variance Materials cost $2.90 per pound $3.00 per pound Unfavorable Materials usage 91,000 pounds 90,000 pounds Favorable Labor cost $10.00 per hour $9.60 per hour Favorable Labor usage 61,000 hours 61,800 hours Unfavorable Fixed cost spending $400,000 $390,000 Favorable Fixed cost per unit (volume) $3.20 per unit $3.16 per unit Favorable Sale volume 40,000 units 42,000 units Favorable Sales price $3.60 per unit $3.63 per unit Favorable 15-1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Chapter 15 Performance Evaluation Exercise 15-2 Item Budget Actual Variance F or U Sales revenue $580,000 $600,000 $20,000 F Cost of goods sold $385,000 $360,000 $25,000 F Material purchases at 5,000 pounds $275,000 $280,000 $ 5,000 U Materials usage $180,000 $178,000 $2,000 F Sales price $500 $489 $11 U Production volume 950 units 900 units 50 units U Wages at 4,000 hours $60,000 $58,700 $1,300 F Labor usage at $16 per hour $96,000 $97,000 $1,000 U Research and development expense $22,000 $25,000 $3,000 U Selling and administrative expenses $49,000 $40,000 $9,000 F Exercise 15-3 Price/Cost per Unit a. Master Budget 1,100 Units b. Flexible Budget 1,300 Units Sales $7.50 $8,250 $9,750 Variable manufacturing $3.00 (3,300) (3,900) Contribution margin 4,950 5,850 Fixed manufacturing (3,000) (3,000) Fixed selling and admin. (1,000) (1,000) Net income $ 950 $ 1,850 15-2
Background image of page 2
Chapter 15 Performance Evaluation Exercise 15-4 Master Budget 1,100 Units Flexible Budget 1,300 Units Volume Variances Sales $8,250 $9,750 $1,500 F Variable manufacturing (3,300) (3,900) 600 U c. Since the sales price and cost per unit are the same for both the master and flexible budgets, the cause of the variances is attributable solely to the fact that the sales volume was 200 units more than planned. The favorable $1,500 sales volume variance suggests that it is beneficial to increase sales. However, more information is needed to confirm this conclusion. As stated in the problem, the increase in sales may have been attained by lowering the price which could result in negative consequences. The unfavorable $600 variable manufacturing cost volume variance is misleading. The total amount of variable cost is expected to increase when volume increases. This variance is expected and not necessarily a bad thing. Upper-level marketing managers are normally responsible for the sales and variable cost volume variances. d. The amount of fixed cost appearing in the flexible budget is $3,000 for manufacturing cost and $1,000 for fixed selling and administrative costs. The fixed costs in both the master and flexible budgets are estimates. Fixed costs are estimated to be the same regardless of the volume of production and sales. e.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 11

work_at_home_soultions_ch15[1] - Chapter 15 Performance...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online