Chapter 9 Budgetary Planning(FILEminimizer)

Chapter 9 Budgetary Planning(FILEminimizer) - Exercises Set...

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Exercises: Set B 1 EXERCISES: SET B Prepare flexible budget reports for manufacturing overhead costs, and comment on findings. (SO 3) Prepare flexible selling expense budget. (SO 3) Prepare flexible budget reports for selling expenses. (SO 3) Prepare and evaluate static budget report. (SO 2) Prepare flexible manufacturing overhead budget. (SO 3) E10-1B Santo Company budgeted selling expenses of $30,000 in January, $37,000 in February, and $45,000 in March.Actual selling expenses were $31,000 in January, $35,500 in February, and $53,000 in March. Instructions (a) Prepare a selling expense report that compares budgeted and actual amounts by month and for the year to date. (b) What is the purpose of the report prepared in (a), and who would be the primary recipient? (c) What would be the likely result of management’s analysis of the report? E10-2B Lyman Company uses a flexible budget for manufacturing overhead based on direct labor hours.Variable manufacturing overhead costs per direct labor hour are as follows. Indirect labor $0.80 Indirect materials 0.50 Utilities 0.40 Fixed overhead costs per month are: Supervision $4,000, Depreciation $2,000, and Property Taxes $800.The company believes it will normally operate in a range of 7,000–10,000 direct labor hours per month. Instructions Prepare a monthly flexible manufacturing overhead budget for 2008 for the expected range of activity, using increments of 1,000 direct labor hours. E10-3B Using the information in E10-2B, assume that in July 2008, Lyman Company incurs the following manufacturing overhead costs. Variable Costs Fixed Costs Indirect labor $7,100 Supervision $4,000 Indirect materials 4,300 Depreciation 2,000 Utilities 3,200 Property taxes 800 Instructions (a) Prepare a flexible budget performance report, assuming that the company worked 9,000 direct labor hours during the month. (b) Prepare a flexible budget performance report, assuming that the company worked 8,500 direct labor hours during the month. (c) Comment on your findings. E10-4B Mordica Company uses flexible budgets to control its selling expenses. Monthly sales are expected to range from $170,000 to $200,000.Variable costs and their percentage relationship to sales are: Sales Commissions 7%,Advertising 4%,Traveling 3%, and Delivery 2%. Fixed selling expenses will consist of Sales Salaries $36,000, Depreciation on Delivery Equipment $7,000, and Insurance on Delivery Equipment $1,000. Instructions Prepare a monthly flexible budget for each $10,000 increment of sales within the relevant range for the year ending December 31, 2008. E10-5B The actual selling expenses incurred in March 2008 by Mordica Company are as follows. Variable Expenses Fixed Expenses Sales commissions $12,900 Sales salaries $36,000 Advertising 7,000 Depreciation 7,000 Travel 5,100 Insurance 1,000 Delivery 3,500 Instructions (a) Prepare a flexible budget performance report for March using the budget data in E10-4B, assuming that March sales were $170,000. Expected and actual sales are the same.
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2 Chapter 10 Budgetary Control and Responsibility Accounting (b) Prepare a flexible budget performance report, assuming that March sales were $180,000.
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