20_AdditionalStudyQuestions2 - ACCY 302 (Chen) Class 20...

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ACCY 302 (Chen) Class 20 Fall 2009 Additional Study Questions Variance Analysis 1. Peterson, Inc., manufactures and sells three products: A, B, and C. In January, Peterson, Inc., budgeted sales of the following. Budgeted Volume Budgeted Price Product A 120,000 $40 Product B 150,000 15 Product C 20,000 20 At the end of the year, actual sales for Product A and Product B were $4,580,000 and $2,415,000 respectively. The actual price charged for each was equal to the budgeted price. Product C, however, had revenues of $500,000. While total revenue was higher than expected, the actual price of $10 represented a last-minute revision from budget to increase consumer acceptance of the product. Required: Calculate the sales price variance and price volume variance for each of the three products based on the original budget. 2. Swan is a specialty chemical produced in batches. Normal denominator volume is 100 batches per week. The weekly flexible budget for indirect costs is $1600 plus $5 per standard hour of direct labor. Indirect costs are absorbed on the basis of standard hours of direct labor. Data for the week just ended are: (1) Production amounted to 103 batches (2) There were 315 hours of direct labor used, costing $2,472. (3) The standards allow 3 hours of direct labor per batch (4) Actual variable overhead for the week was $1,550 (5) Actual fixed overhead for the week was $3,700 Actual Activity Standard Input Flexible Budget Master Budget Overhead Applied Variable Overhead Fixed Overhead Calculate the following variances: Variance Variable Overhead Fixed Overhead Price/Spending Efficiency Activity Production Volume Page 1 of 9
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ACCY 302 (Chen) Class 20 Fall 2009 3. The production report of Illawarra Office Equipment for April 1999 included the following information pertaining to the manufacture of a line of tables: Direct Direct Manufacturing Materials Labor Budgeted spending $540,000 $360,000 Actual spending 672,000 396,000 Variance $132,000 U $ 36,000 F Actual price per unit of input (bd. ft., hr.) $14 $18 Standard price per unit of input $12 $20 Standard inputs allow per unit of output 5 2 Actual units of input 48,000 22,000 Budgeted units of output (product) 9,000 9,000 Actual units of output (product) 10,000 10,000 (a) How much of the Direct Material and Direct Labor Variances are due to (i) price changes, (ii) usage efficiencies or inefficiencies, (iii) activity level changes. (b) Give a plausible explanation for the performance. 4. The following variance analysis table was prepared by Lola Hoffstead, account analyst for the Fundamental Corporation. All the calculations are correct, but Lola is not sure how to apply the overhead. Use the completed table to answer the following questions. Assume Fundamental management isolates variances as soon as possible and in as great a detail as possible in the standard costing system. Actual Activity Standard Input Flexible Budget Master Budget Overhead Applied DM 5220# $1.39/# = $7,250 5220# $1.5/# = $7,830 250 units $30/unit =$7,500 200 units $30/unit = $6,000 N/A DL 3650 hr.
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20_AdditionalStudyQuestions2 - ACCY 302 (Chen) Class 20...

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