chapter 10 solutions

Chapter 10 solutions - CHAPTER 10 Standard Costing and Flexible Budgeting 10-46(20 MINUTES 1 Policy Type Standard Hours per Application Actual

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Unformatted text preview: CHAPTER 10 Standard Costing and Flexible Budgeting 10-46 (20 MINUTES) 1. Policy Type Standard Hours per Application Actual Activity Standard Hours Allowed Automobile ........................................ 1 375 375 Renter's ............................................. 1.5 300 450 Homeowner's ................................... 2 150 300 Health ................................................. 2 600 1,200 Life ...................................................... 5 300 1,500 Total ................................................... 3,825 2. The different types of applications require different amounts of clerical time, and variable overhead cost is related to the use of clerical time. Therefore, basing the flexible budget on the number of applications would give a misleading estimate of overhead costs. For example, processing 100 life insurance applications will entail much more overhead cost than processing 100 automobile insurance applications. 3. Formula flexible budget: Total budgeted monthly overhead cost = ⎟ ⎟ ⎟ ⎠ ⎞ × ⎜ ⎜ ⎜ ⎝ ⎛ hours clerical total hour clerical per cost overhead variable budgeted + budgeted fixed- overhead cost per month Total budgeted monthly overhead cost = ($5.00 × X) + $3,000 where X denotes total clerical time in hours. 4. Budgeted overhead cost for May = ($5.00 × 3,825) + $3,000 = $22,125 10-58 (60 MINUTES) 1. Standard machine hours per unit = production budgeted hours machine budgeted = 6,000 30,000 = 5 hours per unit 2. Actual cost of direct material per unit = units 6,200 $166,000 $540,000 + = $113.87 per unit (rounded) 3. Standard direct-material cost per machine hour = 30,000 $156,000 $504,000 + = $22 per machine hour 4. Standard direct-labour cost per unit = unit per $169.00 units 6,000 $468,000 $546,000 = + 5. Standard variable-overhead rate per machine hour = hours 2,000 $40,400 30,000- 32,000 $1,254,000- $1,294,400 = = $20.20 per machine hour 6. First, continue using the high-low method to determine total budgeted fixed overhead as follows: Total budgeted overhead at 30,000 hours ................................................... Total budgeted overhead at 30,000 hours ....
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This note was uploaded on 02/18/2012 for the course BUSE 237 taught by Professor Sf during the Spring '12 term at Simon Fraser.

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Chapter 10 solutions - CHAPTER 10 Standard Costing and Flexible Budgeting 10-46(20 MINUTES 1 Policy Type Standard Hours per Application Actual

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