Acct306 Homework Ch07

Acct306 Homework Ch07 - 7-1 CHAPTER 7 FLEXIBLE BUDGETS,...

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Unformatted text preview: 7-1 CHAPTER 7 FLEXIBLE BUDGETS, DIRECT-COST VARIANCES, AND MANAGEMENT CONTROL 7-32 Comprehensive variance analysis, responsibility issues. 1a. Actual selling price = $82.00 Budgeted selling price = $80.00 Actual sales volume = 7,275 units Selling price variance = (Actual sales price −Budgeted sales price) × Actual sales volume = ($82 −$80) × 7,275 = $14,550 Favorable 1b. Development of Flexible Budget Budgeted Unit Amounts Actual Volume Flexible Budget Amount Revenues $80.00 7,275 $582,000 Variable costs DM−Frames $2.20/oz. × 3.00 oz. 6.60a7,275 48,015 DM−Lenses $3.10/oz. × 6.00 oz. 18.60b7,275 135,315 Direct manuf. labor $15.00/hr. × 1.20 hrs. 18.00c7,275 130,950 Total variable manufacturing costs 314,280 Fixed manufacturing costs 112,500 Total manufacturing costs 426,780 Gross margin $155,220 a$49,500 ÷ 7,500 units;b$139,500 ÷ 7,500 units;c$135,000 ÷ 7,500 units Actual Results (1) Flexible- Budget Variances (2)=(1)-(3) Flexible Budget (3) Sales - Volume Variance (4)=(3)-(5) Static Budget (5) Units sold 7,275 7,275 7,500 Revenues $596,550 $14,550F $582,000 $18,000 U $600,000 Variable costs DM−Frames 55,872 7,857U 48,015 1,485 F 49,500 DM−Lenses 150,738 15,423U 135,315 4,185 F 139,500 Direct manuf. labor 145,355 14,405U 130,950 4,050 F 135,000 Total variable costs 351,965 37,685U 314,280 9,720 F 324,000 Fixed manuf. costs 108,398 4,102F 112,500 0 112,500 Total costs 460,363 33,583U 426,780 9,720 F 436,500 Gross margin $136,187 $19,033U $155,220 $ 8,280 U $163,500 Level 2 $19,033 U $ 8,280 U Flexible-budget variance Sales-volume variance 7-2 Level 1 $27,313 U Static-budget variance7-3 1c.Price and Efficiency Variances DM−Frames−Actual ounces used = 3.20 per unit × 7,275 units = 23,280 oz. Price per oz. = $55,872÷23,280 = $2.40 DM−Lenses−Actual ounces used = 7.00 per unit × 7,275 units = 50,925 oz. Price per oz. = $150,738 ÷50,925 = $2.96 Direct Labor−Actual labor hours = $145,355÷14.80 = 9,821.3 hours Labor hours per unit = 9,821.3÷7,275 units = 1.35 hours per unit Actual Costs Incurred (Actual Input Quantity ×Actual Price) (1) Actual Input Quantity ×Budgeted Price (2) Flexible Budget (Budgeted Input Quantity Allowed for Actual Output ×Budgeted Price) (3) Direct Materials: Frames(7,275 × 3.2 × $2.40) $55,872 (7,275 × 3.2 × $2.20) $51,216 (7,275 × 3.00 × $2.20) $48,015 $4,656 U $3,201 U Price variance Efficiency variance Direct Materials: Lenses(7,275 × 7.0 × $2.96) $150,738 (7,275 × 7.0 × $3.10) $157,868 (7,275 × 6.00 × $3.10) $135,315 $7,130 F $22,553 U Price variance Efficiency variance Direct Manuf. Labor(7,275 × 1.35 × $14.80) $145,355 (7,275 × 1.35 × $15.00) $147,319 (7,275 × 1.20 × $15.00) $130,950 $1,964 F $16,369 U Price variance Efficiency variance 2. Possible explanations for the price variances are: (a)Unexpected outcomes from purchasing and labor negotiations during the year....
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This note was uploaded on 03/14/2012 for the course ACCT 306 taught by Professor Donkovacic during the Spring '12 term at CSU San Marcos.

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Acct306 Homework Ch07 - 7-1 CHAPTER 7 FLEXIBLE BUDGETS,...

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