chapter%20110 - Apples to Apples, Inc. before the fact . ....

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September 7, 2011 Accounting 2102 1 Chapter 11 Flexible Budgets
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Why use a Flexible Budget? 2 uses of a budget “in practice” 1. before the fact . . . planning 2. after the fact . . . controlling Using a static budget . . . Using a flexible budget . . . September 7, 2011 Accounting 2102 2
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Apples to Apples, Inc. manufactures fruit crates and noted the following actual costs for its manufacturing operations at two activity levels: September 7, 2011 Accounting 2102 3 Develop a cost formula for total manufacturing costs using the high-low method. 10,000 DL hrs 20,000 DL hrs total cost cost per DL hr total cost cost per DL hr Direct Materials $100,000 $10 $200,000 $10  Direct Labor $80,000 $8 $160,000 $8  Manufacturing Overhead $245,000 $25 $285,000 $14 
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Unformatted text preview: Apples to Apples, Inc. before the fact . . . September 7, 2011 Accounting 2102 4 Using the cost formulas developed on the previous slide, prepare a flexible budget for the manufacturing costs at the activity levels listed below. 12,000 DL hours 15,000 DL hours 17,000 DL hours Total Manufacturing Costs Apples to Apples, Inc. after the fact . . . September 7, 2011 Accounting 2102 5 Actual manufacturing costs for the month just ended are listed below. The actual activity level was 15,000 DL hours. Using a flexible budget, calculate the dollar variance for total manufacturing costs and indicate if the variance is favorable or unfavorable. Budget Actual Variance Total Manufacturing Costs $545,000...
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This note was uploaded on 09/07/2011 for the course ACCT 2102 taught by Professor Farmer during the Spring '08 term at University of Georgia Athens.

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chapter%20110 - Apples to Apples, Inc. before the fact . ....

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