AC505 Formula Template-SG - Sample Problem: E:2-11 (Pg. 63)...

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Unformatted text preview: Sample Problem: E:2-11 (Pg. 63) Direct Materials (DM) = Direct Labor (DL) = Overhead (OH) = $110,000 $70,000 Answered in Question $80,000 Answered in Question Beginning Raw Materials Inventory (+) Purchases Raw Materials Avail for Use (-) End Raw Materials Inv. (=) Raw Materials Used In Prod. $7,000 $118,000 $125,000 $15,000 $110,000 Sample Problem: E:2-11 (Pg. 63) Direct Materials (DM) = Direct Labor (DL) = Overhead (OH) = Beginning Raw Materials Inventory (+) Purchases Raw Materials Avail for Use (-) End Raw Materials Inv. (=) Raw Materials Used In Prod. Beginning Work in Progress Inventory (+) Current Month Manufactured Total Manufactured Cost (-) End Work In Progress (=) Cost of Goods $10,000 $260,000 $270,000 $5,000 $265,000 Beginning Finished Goods Inventory (+) Cost of Goods Manufactured Goods Available for Sale (-) End Finished Goods Inventory (=) Cost of Goods Sold $20,000 $265,000 $285,000 $35,000 $250,000 $80,000 Answered in Question Answered in Question $100,000 $100,000 $20,000 $80,000 Beginning Work in Progress Inventory (+) Current Month Manufactured Total Manufactured Cost (-) End Work In Progress (=) Cost of Goods $$- Beginning Finished Goods Inventory (+) Cost of Goods Manufactured Goods Available for Sale (-) End Finished Goods Inventory (=) Cost of Goods Sold $$$- Mod 1B Example Direct Materials (DM) = Direct Labor (DL) = Overhead (OH) = Total Manufactured Cost = Beginning Raw Materials Inventory (+) Purchases Raw Materials Avail for Use (-) End Raw Materials Inv. (=) Raw Materials Used In Prod. $6,000 $5,000 Answered in Question $6,000 Answered in Question $17,000 $2,000 $5,000 $7,000 $1,000 $6,000 Beginning Work in Progress Inventory (+) Current Month Manufactured Total Manufactured Cost (-) End Work In Progress (=) Cost of Goods $3,000 $3,000 $2,000 $1,000 Beginning Finished Goods Inventory (+) Cost of Goods Manufactured Goods Available for Sale (-) End Finished Goods Inventory (=) Cost of Goods Sold $8,000 $1,000 $9,000 $7,000 $2,000 Beginning Finished Goods Inventory (+) Cost of Goods Manufactured Goods Available for Sale (-) End Finished Goods Inventory (=) Cost of Goods Sold $10,000 $1,500 $11,500 $5,000 $6,500 Mod 1B Problem Direct Materials (DM) = Direct Labor (DL) = Overhead (OH) = Total Manufactured Cost = Beginning Raw Materials Inventory (+) Purchases Raw Materials Avail for Use (-) End Raw Materials Inv. (=) Raw Materials Used In Prod. $3,500 $4,000 Answered in Question $6,000 Answered in Question $13,500 $1,000 $3,000 $4,000 $500 $3,500 Beginning Work in Progress Inventory (+) Current Month Manufactured Total Manufactured Cost (-) End Work In Progress (=) Cost of Goods $3,500 $3,500 $2,000 $1,500 Mod 1C Problem Direct Materials (DM) = Direct Labor (DL) = Overhead (OH) = Total Manufactured Cost = Beginning Raw Materials Inventory (+) Purchases Raw Materials Avail for Use (-) End Raw Materials Inv. (=) Raw Materials Used In Prod. $3,500 $4,000 Answered in Question $6,000 Answered in Question $13,500 $1,000 $3,000 $4,000 $500 $3,500 Beginning Work in Progress Inventory (+) Current Month Manufactured Total Manufactured Cost (-) End Work In Progress (=) Cost of Goods (Manufactured) $3,500 $13,500 $17,000 $2,000 $15,000 Beginning Finished Goods Inventory (+) Cost of Goods Manufactured Goods Available for Sale (-) End Finished Goods Inventory (=) Cost of Goods Sold $15,000 $15,000 $15,000 Mod 1D Problem Direct Materials (DM) = Direct Labor (DL) = Overhead (OH) = Total Manufactured Cost = Beginning Raw Materials Inventory (+) Purchases Raw Materials Avail for Use (-) End Raw Materials Inv. (=) Raw Materials Used In Prod. Sales (-) Cost of Goods Sold (Product Cost) (CGM) (=) Gross Margin (CGM) Exer D1 Inventories Direct Materials WIP Finished Goods $3,500 $4,000 Answered in Question $6,000 Answered in Question $13,500 $1,000 $3,000 $4,000 $500 $3,500 $50,000 $15,000 $35,000 Beginning Work in Progress Inventory (+) Current Month Manufactured Total Manufactured Cost (-) End Work In Progress (=) Cost of Goods (Manufactured) (CGM) $3,500 $13,500 $17,000 $2,000 $15,000 Sales Revenue (=) Cost of Goods Sold (CGM&S) (=) Gross Margin (-) Period Cost Selling Cost General and Admin Cost (=) Net Operating Cost $50,000 $20,000 $30,000 Beginning Finished Goods Inventory (+) Cost of Goods Manufactured Goods Available for Sale (-) End Finished Goods Inventory (=) Cost of Goods Sold (CGM&S) $10,000 $15,000 $25,000 $5,000 $20,000 (=) Cost of Goods Sold (CGM&S) (=) Gross Margin (=) Net Operating Cost $20,000 $30,000 $23,000 Beginning Finished Goods Inventory (+) Cost of Goods Manufactured Goods Available for Sale (-) End Finished Goods Inventory (=) Cost of Goods Sold (CGM&S) $8,000 $18,000 $26,000 $7,000 $19,000 Beginning Finished Goods Inventory (+) Cost of Goods Manufactured Goods Available for Sale (-) End Finished Goods Inventory (=) Cost of Goods Sold (CGM&S) $10,000 $15,000 $25,000 $5,000 $20,000 (=) Cost of Goods Sold (CGM&S) (=) Gross Margin (=) Net Operating Cost Dec. 31, 2009 Dec. 31, 2010 $1,000 $500 $3,500 $2,000 $10,000 $5,000 $20,000 $30,000 $23,000 $2,000 $5,000 $23,000 Other Data: Direct materials purchased on credit Direct Labor Overhead Selling Costs General and Administrative Costs Sales Calculated Amounts Total Manufacturing Costs CGM $3,000 $4,000 $6,000 $2,000 $5,000 $50,000 $13,500 $15,000 Mod 1D Example Direct Materials (DM) = Direct Labor (DL) = Overhead (OH) = Total Manufactured Cost = Beginning Raw Materials Inventory (+) Purchases Raw Materials Avail for Use (-) End Raw Materials Inv. (=) Raw Materials Used In Prod. Sales (-) Cost of Goods Sold (Product Cost) (CGM) (=) Gross Margin $6,000 $5,000 Answered in Question $6,000 Answered in Question $17,000 $2,000 $5,000 $7,000 $1,000 $6,000 $60,000 $18,000 $42,000 Beginning Work in Progress Inventory (+) Current Month Manufactured Total Manufactured Cost (-) End Work In Progress (=) Cost of Goods (Manufactured) (CGM) $3,000 $17,000 $20,000 $2,000 $18,000 Sales Revenue (-) Cost of Goods Sold (CGM&S ) (=) Gross Margin (-) Period Cost Selling Cost General and Admin Cost (=) Net Operating Cost $60,000 $19,000 $41,000 $3,000 $8,000 $30,000 Mod 1E Problem Direct Materials (DM) = Direct Labor (DL) = Overhead (OH) = Total Manufactured Cost = Beginning Raw Materials Inventory (+) Purchases Raw Materials Avail for Use (-) End Raw Materials Inv. (=) Raw Materials Used In Prod. Sales (-) Cost of Goods Sold (Product Cost) (CGM) (=) Gross Margin (CGM) $3,500 $4,000 Answered in Question $6,000 Answered in Question $13,500 $1,000 $3,000 $4,000 $500 $3,500 $50,000 $15,000 $35,000 Beginning Work in Progress Inventory (+) Current Month Manufactured Total Manufactured Cost (-) End Work In Progress (=) Cost of Goods (Manufactured) (CGM) $3,500 $13,500 $17,000 $2,000 $15,000 Sales Revenue (=) Cost of Goods Sold (CGM&S) (=) Gross Margin (-) Period Cost Selling Cost General and Admin Cost (=) Net Operating Cost $50,000 $20,000 $30,000 $2,000 $5,000 $23,000 Mod 1 -TEST 1.1 Direct Materials (DM) = Direct Labor (DL) = Overhead (OH) = Total Manufactured Cost = Beginning Raw Materials Inventory (+) Purchases Raw Materials Avail for Use (-) End Raw Materials Inv. (=) Raw Materials Used In Prod. Sales Revenue (-) Cost of Goods Sold (Product Cost) (CGM) (=) Gross Margin (CGM) Inventories Direct Materials WIP Finished Goods $6,600 $5,000 Answered in Question $7,000 Answered in Question $18,600 $3,000 $6,000 $9,000 $2,400 $6,600 $50,000 $20,100 $29,900 Beginning Work in Progress Inventory (+) Current Month Manufactured Total Manufactured Cost (-) End Work In Progress (=) Cost of Goods (Manufactured) (CGM) Sales Revenue (=) Cost of Goods Sold (CGM&S) (=) Gross Margin (-) Period Cost Selling Cost General and Admin Cost (=) Net Operating Cost $3,500 $18,600 $22,100 $2,000 $20,100 $50,000 $(19,900) $69,900 Beginning Finished Goods Inventory (+) Cost of Goods Manufactured Goods Available for Sale (-) End Finished Goods Inventory (=) Cost of Goods Sold (CGM&S) $10,000 $20,100 $30,100 $50,000 $(19,900) (=) Cost of Goods Sold (CGM&S) (=) Gross Margin (=) Net Operating Cost $(19,900) $69,900 $62,900 Beginning Raw Materials Inventory (+) Purchases Raw Materials Avail for Use (-) End Raw Materials Inv. (=) Raw Materials Used In Prod. Sales Revenue (-) Cost of Goods Sold (Product Cost) (CGM) (=) Gross Margin (CGM) Inventories Direct Materials WIP Finished Goods $6,600 $5,000 Answered in Question $7,000 Answered in Question $18,600 $3,000 $6,000 $9,000 $2,400 $6,600 $50,000 $19,100 $30,900 Beginning Work in Progress Inventory (+) Current Month Manufactured Total Manufactured Cost (-) End Work In Progress (=) Cost of Goods (Manufactured) (CGM) Sales Revenue (=) Cost of Goods Sold (CGM&S) (=) Gross Margin (-) Period Cost Selling Cost General and Admin Cost (=) Net Operating Cost $3,500 $18,600 $22,100 $3,000 $19,100 $50,000 $(20,900) $70,900 Beginning Finished Goods Inventory (+) Cost of Goods Manufactured Goods Available for Sale (-) End Finished Goods Inventory (=) Cost of Goods Sold (CGM&S) $10,000 $19,100 $29,100 $50,000 $(20,900) (=) Cost of Goods Sold (CGM&S) (=) Gross Margin (=) Net Operating Cost Beginning Raw Materials Inventory (+) Purchases Raw Materials Avail for Use (-) End Raw Materials Inv. (=) Raw Materials Used In Prod. Sales Revenue (-) Cost of Goods Sold (Product Cost) (CGM) (=) Gross Margin (CGM) $50,000 $19,000 $31,000 $6,000 $5,000 $7,000 $2,000 $5,000 $50,000 $2,000 $5,000 $63,900 Inventories Direct Materials WIP Finished Goods $4,500 $6,000 Answered in Question $7,000 Answered in Question $17,500 $2,000 $5,000 $7,000 $2,500 $4,500 Other Data: Direct materials purchesed on credit Direct Labor Overhead Selling Costs General and Administrative Costs Sales Dec. 31, 2010 Dec. 31, 2011 $3,000 $2,400 $3,500 $3,000 $10,000 $5,000 $(20,900) $70,900 $63,900 Mod 1 -TEST 1.3 Direct Materials (DM) = Direct Labor (DL) = Overhead (OH) = Total Manufactured Cost = $6,000 $5,000 $7,000 $2,000 $5,000 $50,000 $2,000 $5,000 $62,900 Mod 1 -TEST 1.2 Direct Materials (DM) = Direct Labor (DL) = Overhead (OH) = Total Manufactured Cost = Other Data: Direct materials purchesed on credit Direct Labor Overhead Selling Costs General and Administrative Costs Sales Dec. 31, 2010 Dec. 31, 2011 $3,000 $2,400 $3,500 $2,000 $10,000 $5,000 Beginning Work in Progress Inventory (+) Current Month Manufactured Total Manufactured Cost (-) End Work In Progress (=) Cost of Goods (Manufactured) (CGM) $3,500 $17,500 $21,000 $2,000 $19,000 Sales Revenue (=) Cost of Goods Sold (CGM&S) (=) Gross Margin (-) Period Cost Selling Cost General and Admin Cost (=) Net Operating Cost/Income $50,000 $24,000 $26,000 $2,000 $5,000 $19,000 Beginning Finished Goods Inventory (+) Cost of Goods Manufactured Goods Available for Sale (-) End Finished Goods Inventory (=) Cost of Goods Sold (CGM&S) $10,000 $19,000 $29,000 $5,000 $24,000 (=) Cost of Goods Sold (CGM&S) (=) Gross Margin (=) Net Operating Income $24,000 $26,000 $19,000 Other Data: Direct materials purchased on credit Direct Labor Overhead Selling Costs General and Administrative Costs Sales Dec. 31, 2009 Dec. 31, 2010 $2,000 $2,500 $3,500 $2,000 $10,000 $5,000 $5,000 $6,000 $7,000 $2,000 $5,000 $50,000 Class Notes Pg. 229 Step 1 Chg $ (Divide) Chg Units Pg 214 Solved Step 1 Step 2 Step 2 Money Units Y = A + B(X) Fixed Cost Element = Total cost -Variable Cost Element Y= Money High and Low Variable A= Fixed Monthly Maint Cost $281.32 B= Variable Cost $4.43 X= Units High and Low Variable High (-) $15,738 3,489 Low $10,825 2,380 (=) Sum $4,913 1,109 Total Y= $15,738 $281.32 A (+) $281.32 $281.32 B $4.43 $4.43 (X) 3,489 A (+) $5,912.00 $5,912.00 B $4.43 $4.43 (X) 1,109 Formula Y= $10,825 $5,912.00 Mod 1 - G.1 Step 1 (Divide) (=) B Value (Divide) Y = A + B(X) Fixed Cost Element = Total cost -Variable Cost Element Y= Money High and Low Variable A= Fixed Monthly Maint Cost $9,500.00 B= Variable Cost $3.00 X= Units High and Low Variable High (-) $15,200 1,900 Low $12,800 1,100 (=) Sum $2,400 800 Y= $15,200 $15,200.00 A (+) $9,500.00 $9,500.00 Y= $12,800 $16,100.00 Total Chg $ Chg Units Formula Low Step 2 Step 1 Money Units (=) Sum $1,400,000 4,000 Y= $2,800,000 $315,000.00 A (+) $315,000.00 $315,000.00 Formula Y= $1,400,000 $- A (+) $$- Mod 1 Test 1.6 Step 1 (Divide) Chg $ Chg Units Low Formula Sum B(X) $4,913.00 Low Formula Y = A + B(X) Fixed Cost Element = Total cost -Variable Cost Element Y= Money High and Low Variable A= Fixed Monthly Maint Cost $315,000.00 B= Variable Cost $350.00 X= Units High and Low Variable Low $1,400,000 3,100 Formula High Step 2 Step 1 Money Units High Formula Low Formula B $3.00 $3.00 (X) 1,900 1900 Sum B(X) $5,700.00 A (+) $10,400.00 $10,400.00 B $3.00 $3.00 (X) 800 1900 Sum B(X) $2,400.00 X Machine Hours 200 100 Total $350.00 (=) B Value B $350.00 $350.00 (X) 7,100 Sum B(X) $2,485,000.00 B $350.00 $350.00 (X) 4,000 X Machine Hours Step 1 Money Units High Formula Sum B(X) $1,400,000.00 Low Formula Y Indirect Mfg. Labor Costs Y Indirect Mfg. Labor Costs 15000 10000 Y = A + B(X) Fixed Cost Element = Total cost -Variable Cost Element Y= Money High and Low Variable A= Fixed Monthly Maint Cost $5,000.00 B= Variable Cost $50.00 X= Units High and Low Variable High (-) $15,000 200 Low $10,000 100 (=) Sum $5,000 100 Y= $15,000 $5,000.00 A (+) $5,000.00 $5,000.00 Y= $10,000 $5,000.00 A (+) $5,000.00 $5,000.00 Mod 1 Test 1.6 Step 1 Chg $ (Divide) Chg Units High Observation -Week 8 Low Observation -Week 3 Step 2 (=) B Value Mod 1 Test 1.6 Step 1 Chg $ (Divide) Chg Units High (-) $2,800,000 7,100 High Sum B(X) $15,456.68 $3.00 High Observation -Week 8 Low Observation -Week 3 High $4.43 Money Units Chg $ Chg Units Total $50.00 (=) B Value B $50.00 $50.00 (X) 200 Sum B(X) $10,000.00 B $50.00 $50.00 (X) 100 Sum B(X) $5,000.00 X Machine Hours Y Indirect Mfg. Labor Costs High Observation -Week 8 Low Observation -Week 3 Y = A + B(X) Fixed Cost Element = Total cost -Variable Cost Element Y= Money High and Low Variable A= Fixed Monthly Maint Cost #DIV/0! B= Variable Cost #DIV/0! X= Units High and Low Variable High (-) $0 Low $0 (=) Sum $0 Y= $#DIV/0! A (+) #DIV/0! #DIV/0! Y= $#DIV/0! A (+) #DIV/0! #DIV/0! Step 2 Total #DIV/0! (=) B Value B #DIV/0! #DIV/0! (X) 0 Sum B(X) #DIV/0! B #DIV/0! #DIV/0! (X) 0 Step 1 Money Units High Formula Sum B(X) #DIV/0! Low Formula Y = A + B(X) Fixed Cost Element = Total cost -Variable Cost Element Y= Money High and Low Variable A= Fixed Monthly Maint Cost #DIV/0! B= Variable Cost #DIV/0! X= Units High and Low Variable High (-) $0 Low $0 (=) Sum $0 Y= $#DIV/0! A (+) #DIV/0! #DIV/0! Y= $#DIV/0! A (+) #DIV/0! #DIV/0! Total #DIV/0! (=) B Value B #DIV/0! #DIV/0! (X) 0 Sum B(X) #DIV/0! B #DIV/0! #DIV/0! (X) 0 Sum B(X) #DIV/0! E4-9 Sample Class Problem S1: Units to Account For: Beginning WIP Inventory (+) Units Started (=) Units to Account For MASTER FORMULA Units 5,000 180,000 185,000 Percentage Completed Direct Materials 100% Conversion (DL+OH) 4 0% Units (Step 1 & 2 Must Match) Account for Them Completed & Shipped Out WIP Ending Inventory (=) Units to Account For Units 175,000 10,000 185,000 Percentage Completed Direct Materials 100% Conversion (DL+OH) 30% Units (Step 1 & 2 Must Match) S3: Equivalent Units Completed & Shipped Out WIP Ending Inventory (=) Units to Account For Direct Materials 175,000 10,000 185,000 Conversion (DL+OH) 175,000 3,000 178,000 S4: Get the $$ Amounts Spent $ Last Month Spent $ This Month Total Direct Materials $1,500.00 $54,000.00 $55,500.00 Conversion (DL+OH) $4,000.00 $352,000.00 $356,000.00 S: S5: Get Per Unit Cost Percentage Completed Direct Materials Conversion (DL+OH) Units (Step 1 & 2 Must Match) - S2: Account for Them Completed & Shipped Out WIP Ending Inventory (=) Units to Account For Units - Reconcile Transfer Out Units 175,000 Rate $2.30 Ending WIP Direct Materials Conversion (DL+OH) Units 10,000 3,000 Rate $0.30 $2.00 Subtotal Direct Materials Conversion (DL+OH) $- $- Total $3,000.00 $6,000.00 $9,000.00 S5: Get Per Unit Cost Budgeted OH Budgeted Direct Labor $675,000.00 $450,000.00 Budgeted OH Budgeted Direct Labor (Divide) Applied Overhead = $800,000.00 $100,000.00 Application Rate (x) $ XX,XXX XXX,XXX Units Conversion (DL+OH) $#DIV/0! Problem Mod 2 C2- Journal Entry W IP Machine Hours Budgeted Factory OH Budgeted Mach Hr Actual Hours Total Rate 150% Cost Accting System - External Ending WIP Inventory Equivalent Units of Production Cost per Unit Total #DIV/0! #DIV/0! #DIV/0! Total Rate 8.00 Conversion (DL+OH) Direct Materials Total Units Completed and Transferred Units Transferred to Next Dept Cost per Unit Application Rate (Divide) Applied Overhead = $$Direct Materials $$- Budgeted Overhead Budgeted Cost Machine Hrs Budgeted Activity Level (Main Idea Cost) Applied Overhead = Budgeted OH Budgeted Direct Labor Budgeted Activity Level $360,000.00 $18,000.00 Actual Activity Level Actual Direct Labor $18,650.00 Application Rate (x) 20.00 Account Title WIP Inventory Manufacturing OH Debt Total Rate 20.00 (+) Material Cost (+) Labor Cost Debt Application of Overhead Account Title WIP Inventory Manufacturing OH Total $373,000.00 Credit $373,000.00 (Divide) Applied Overhead = Budgeted OH Budgeted Cost Material Budgeted Activity Level $660,000.00 $550,000.00 Actual Activity Level Actual Direct Labor $535,000.00 Application Rate (x) 1.20 Application of Overhead Account Title WIP Inventory Manufacturing OH Debt Applied Overhead = Total Rate 1.20 Application of Overhead Account Title WIP Inventory Manufacturing OH $624,720 $76,000 Actual Activity Level Actual Direct Labor $78,500 (+) Material Cost (+) Labor Cost Debt S: Total Rate 1.41 Total Rate 8.22 Total $645,270.00 Q6 Total #DIV/0! Application Rate (=) Total Job $645,270 Credit -$7,270 -$7,270 $750,000 $60,000 Actual Activity Level Actual Direct Labor $62,500 (+) Material Cost (+) Labor Cost Debt Total Rate 12.5 Total $781,250.00 (=) Total Job $781,250 Credit $781,250.00 $781,250.00 #DIV/0! #DIV/0! Over Applied or Under Applied Actual Overhead (-) Applied OH Total (Disposal of Varienace) #DIV/0! #DIV/0! Disposal Varience Account Title W IP Inventory Manufacturing OH $765,000 $781,250 -$16,250 Positive Outcome = Underapplied Negative Outcome = Overapplied Debt Disposal Varience Account Title Cost of Goods Sold Manufacturing OH Credit Debt Credit -$16,250 -$16,250 #DIV/0! #DIV/0! Credit Q7 S1: Units to Account For: Beginning WIP Inventory (+) Units Started (=) Units to Account For Percentage Completed Direct Materials 75% Conversion (DL+OH) 65% Units (Step 1 & 2 Must Match) Units 322,000 38,000 360,000 Percentage Completed Direct Materials 60% Conversion (DL+OH) 55% Units (Step 1 & 2 Must Match) S3: Equivalent Units Completed & Shipped Out WIP Ending Inventory (=) Units to Account For Direct Materials 322,000 22,800 344,800 Conversion (DL+OH) 322,000 20,900 342,900 Q8 $642,000.00 Units 315,000 4 5,000 360,000 S2: Account for Them Completed & Shipped Out WIP Ending Inventory (=) Units to Account For $642,000.00 Direct Materials $11,680.00 $43,260.00 $54,940.00 DL $18,750.00 $21,300.00 $40,050.00 Problem Mod 2 C3 Expected DL Hrs Expected DL Cost Expected Machine Hrs Expected Cost of Material Expected Overhead Job 253 Cost of materials used Job 253 DL Cost (150hrs) Job 253 Machine Hours 50,000 $725,000 20,000 $900,000 $1,100,000 $3,000 $1,650 110 Determine the Total Cost of Job 253 if the uses the Machine Hours to apply OH Total Cost of Job Application Rate (Divide) A pplied Overhead = $10,700 Budgeted OH Budgeted Cost Machine Hrs Budgeted Activity Level (Main Idea Cost) $1,100,000 $20,000.00 Total Rate 55.00 Q3 Actual Activity Level Actual Direct Labor Application Rate (x) 55.00 Test 1 Application Rate (Divide) Total 110 $6,050.00 Applied Overhead = Applied Overhead (+) Material Cost (+) Labor Cost $6,050.00 $3,000 Budgeted Overhead Budgeted Cost Machine Hrs Budgeted Activity Level (Main Idea Cost) Actual Activity Level Actual Direct Labor $78,500 Application Rate (x) 8.22 (=) Total Job $1,650 $624,720 $76,000 Total Rate 8.22 S5: Get Per Unit Cost Total $645,270.00 $10,700 Cost Equivalent Units (eq) Total Q5 Example Problem Application Rate Application Rate Budgeted OH (Divide) Budgeted Cost Material Budgeted Activity Level (Main Idea Cost) Applied Overhead = $230,000.00 $50,000.00 4 .60 A pplied Overhead (+) Material Cost (+) Labor Cost $39,100.00 $25,000 Problem Mod 2 D1 Disposal of Variance WIP DL Hrs Est manfact. Overhead Est Prod. Workers Worked Total Rate 4 .60 Total $39,100.00 (Divide) $30,000 $94,100 A pplication of Overhead A ccount Title W IP Inventory Manufacturing OH Applied Overhead $650,000.00 $50,000.00 (+) Material Cost 13.00 Total Rate 13.00 Credit $826,000 $820,620 $5,380 Q6 Debt Credit $5,380 $5,380 Application Rate (=) Total Job Budgeted Overhead Budgeted Cost Machine Hrs Budgeted Activity Level (Main Idea Cost) $585,000 Applied Overhead = $667,000 $585,000 $82,000 Underapplied Applied Overhead $628,000.00 Positive Outcome = Underapplied Negative Outcome = Overapplied Application of Overhead Account Title WIP Inventory Manufacturing OH Budgeted OH (Divide) Budgeted Cost Material Budgeted Activity Level (Main Idea Cost) Applied Overhead = Actual Activity Level Actual Direct Labor $21,000.00 Application Rate (x) Applied Overhead $270,000.00 $20,000.00 (+) Material Cost 13.50 (+) Labor Cost Total Rate 13.50 (+) Material Cost (+) Labor Cost Debt Total Rate 8 Total $628,000.00 (=) Total Job $628,000 Credit $628,000.00 $628,000.00 $638,000 $628,000 $10,000 Positive Outcome = Underapplied Negative Outcome = Overapplied (=) Total Job $283,500.00 Actual Activity Level Actual Direct Labor $78,500 Application Rate (x) 8.00 Over Applied or Under Applied Actual Overhead (-) Applied OH Total (Disposal of Varienace) Total $283,500.00 $640,000 $80,000 $283,500 Over/UnderApplied Actual Overhead (-) Applied OH Total Disposal Varience Account Title Cost of Goods Sold Manufacturing OH $299,100 $283,500 $15,600 Underapplied Positive Outcome = Underapplied Negative Outcome = Overapplied $10,000 Percentage Completed Direct Materials 80% Conversion (DL+OH) 60% Units (Step 1 & 2 Must Match) Units 385,000 4 5,000 4 30,000 Percentage Completed Direct Materials 70% Conversion (DL+OH) 60% Units (Step 1 & 2 Must Match) S3: Equivalent Units Completed & Shipped Out WIP Ending Inventory (=) Units to Account For Direct Materials 385,000 31,500 4 16,500 Conversion (DL+OH) 385,000 27,000 4 12,000 Q8 Get the $$ Amounts Spent $ Last Month Spent $ This Month Total $750,000.00 $75,000.00 $300,000.00 $100,000.00 Units 380,000 50,000 4 30,000 S2: Account for Them Completed & Shipped Out WIP Ending Inventory (=) Units to Account For $775,000.00 $840,000.00 $620,000.00 $580,000.00 Year End Results Include Raw Material Inventory WIP Process Inventory Cost of Goods Sold Finished Goods Inventory Credit $10,000 Q7 S1: Units to Account For: Beginning WIP Inventory (+) Units Started (=) Units to Account For Problem Mod 2 D2 Disposal of Variance Journal Entry Budgeted Factory Overhead Actual Facotry Overhead Budgeted DL Cost Actual DL Cost Debt Direct Materials $13,440.00 $84,560.00 $98,000.00 DL $24,430.00 $19,900.00 $44,330.00 Dispose of the Overhead Variance, difference is immaterial A pplication Rate (Divide) A pplied Overhead = Budgeted OH Budgeted Cost Material Budgeted Activity Level (Main Idea Cost) $775,000.00 $620,000.00 Actual Activity Level Actual Direct Labor $580,000.00 Application Rate (x) 1.25 A pplied Overhead (+) Material Cost (+) Labor Cost Total Rate 1.25 Total $725,000.00 (=) Total Job $725,000.00 S5: Get Per Unit Cost $725,000 Over/UnderApplied Actual Overhead (-) Applied OH Total Cost Equivalent Units (eq) Total $840,000 $725,000 $115,000 Underapplied Positive Outcome = Underapplied Negative Outcome = Overapplied Account Title Cost of Goods Sold Manufacturing OH Cost Accting System - External Ending WIP Inventory Equivalent Units of Production Cost per Unit Credit $115,000 $115,000 (Divide) Applied Overhead = Budgeted OH Budgeted Cost Material Budgeted Activity Level (Main Idea Cost) $923,000.00 $650,000.00 Actual Activity Level Actual Direct Labor $682,000.00 Application Rate (x) 1.42 A pplied Overhead (+) Material Cost (+) Labor Cost (=) Total Job $975,000 $968,440 $6,560 Underapplied Credit $6,560 $6,560 Problem: Mod 2 E1 S1: Units to Account For: Beginning WIP Inventory (+) Units Started (=) Units to Account For Units 375,000 50,000 4 25,000 Percentage Completed Direct Materials 80% Conversion (DL+OH) 60% Units (Step 1 & 2 Must Match) S2: Account for Them Completed & Shipped Out WIP Ending Inventory (=) Units to Account For Units 380,000 4 5,000 4 25,000 Percentage Completed Direct Materials 75% Conversion (DL+OH) 65% Units (Step 1 & 2 Must Match) S3: Equivalent Units Completed & Shipped Out WIP Ending Inventory (=) Units to Account For Direct Materials 380,000 33,750 4 13,750 Conversion (DL+OH) 380,000 29,250 4 09,250 Direct Materials $16,850 $92,400 $109,250 DL $27,230 $18,660 $45,890 $182,400 Total $148,280.00 $189,260.00 $337,540.00 $ XX,XXX XXX,XXX Units DL $45,890.00 1,200 $38.24 OH $182,400.00 1,200 $152.00 RATE $268.28 Problem: Mod 2 E2 S4: Get the $$ Amounts Spent $ Last Month Spent $ This Month Total S5: Get Per Unit Cost Sample Cost Equivalent Units (eq) Total Direct Materials $109,250.00 1,400 $78.04 OH $104,200 $78,200 Problem Mod 2 E3 Cost Accting System - External Ending WIP Inventory Equivalent Units of Production Cost per Unit Total U nits Completed and Transferred Units Transferred to Next Dept Cost per Unit Direct Materials 4 00 $30.20 $12,080.00 Direct Materials 1,400 $30.20 $42,280.00 Conversion (DL+OH) 200 $8.45 $1,690.00 Conversion (DL+OH) 1,400 $8.45 $11,830.00 Total $13,770.00 Total $54,110.00 Problem Mod 2 C3 Expected DL Hrs Expected DL Cost Expected Machine Hrs Expected Cost of Material Expected Overhead Job 253 Cost of materials used Job 253 DL Cost (150hrs) Job 253 Machine Hours $5,200 $3,150 220 Determine the Total Cost of Job 253 if the uses the Machine Hours to apply OH Total Cost of Job Application Rate (Divide) Applied Overhead = $11,650 Budgeted OH Budgeted Cost Machine Hrs Budgeted Activity Level (Main Idea Cost) $0 $20,000.00 Actual Activity Level Actual Direct Labor Application Rate (x) 15.00 A pplied Overhead Total 220 (+) Material Cost $3,300.00 Total Rate 15.00 (+) Labor Cost $5,200 $3,300.00 (=) Total Job $3,150 $11,650 Direct Materials 4 40 Total U nits Completed and Transferred Units Transferred to Next Dept Cost per Unit Positive Outcome = Underapplied Negative Outcome = Overapplied Debt $31.55 $13,882.00 Direct Materials 1,145 $30.20 $34,579.00 Cost Accting System - External Ending WIP Inventory Equivalent Units of Production Cost per Unit Total $968,440.00 $968,440 Over/UnderApplied Actual Overhead (-) Applied OH Total Direct Materials 4 40 Total U nits Completed and Transferred Units Transferred to Next Dept Cost per Unit Total Rate 1.42 $968,440.00 Account Title Cost of Goods Sold Manufacturing OH $ XX,XXX XXX,XXX Units DL $44,330.00 1,320 $33.58 OH $174,450.00 1,280 $136.29 Q9 Debt Example Problem A pplication Rate Sample Direct Materials $98,000.00 1,200 $81.67 OH 100200 7 4250 $174,450.00 $31.55 $13,882.00 Direct Materials 1,145 $31.55 $36,124.75 Conversion (DL+OH) 4 85 $10.82 $5,247.70 Conversion (DL+OH) 1,145 $8.45 $9,675.25 Conversion (DL+OH) 4 85 $10.82 $5,247.70 Conversion (DL+OH) 1,145 $10.82 $12,388.90 Total $19,129.70 Total $44,254.25 Total $19,129.70 Total $48,513.65 Cost Accting System - External Ending WIP Inventory Equivalent Units of Production Cost per Unit Total Units Completed and Transferred Units Transferred to Next Dept Cost per Unit $820,620.00 Disposal Varience Account Title Cost of Goods Sold Manufacturing OH Total $585,000.00 $585,000.00 Example Problem Application Rate Q9 $820,620.00 (Divide) (+) Labor Cost Over/UnderApplied Actual Overhead (-) Applied OH Total Total $820,620.00 (=) Total Job $820,620 Positive Outcome = Underapplied Negative Outcome = Overapplied Actual Activity Level Actual Direct Labor $45,000.00 Application Rate (x) $ XX,XXX XXX,XXX Units DL $40,050.00 1,280 $31.29 OH $108,690.00 1,210 $89.83 Q9 (+) Labor Cost Debt Over Applied or Under Applied Actual Overhead (-) Applied OH Total (Disposal of Varienace) Budgeted OH Budgeted Cost Material Budgeted Activity Level (Main Idea Cost) Applied Overhead = (+) Material Cost Sample Direct Materials $54,940.00 1,140 $48.19 OH 64400 4 4290 $108,690.00 Total Rate 1.41 (=) Total Job $667,000 $45,000 Application Rate $775,500 $550,000 Actual Activity Level Actual Direct Labor $582,000 Application Rate (x) 1.41 A pplied Overhead $820,620.00 $650,000 $50,000 Actua Overhead Actual Hrs Worked Budgeted Overhead (Divide) Budgeted Cost Machine Hrs Budgeted Activity Level (Main Idea Cost) Applied Overhead = Actual Activity Level Actual Direct Labor $8,500.00 Application Rate (x) Get the $$ Amounts Spent $ Last Month Spent $ This Month Total Total $138,070.00 $178,710.00 $316,780.00 RATE $251.54 Direct Materials 350 $28.80 $10,080.00 Direct Materials 1,210 $28.80 $34,848.00 Direct Materials $600,000.00 510,000 $1.18 $ XX,XXX XXX,XXX Units Conversion (DL+OH) $630,000.00 4 92,000 $1.28 RATE $2.46 Units 4 80,000 Rate $2.46 Total $1,179,340.03 Units 30,000 12,000 Rate $1.18 $1.28 Subtotal Total $35,294.12 $15,365.85 $50,659.97 Sample $630,000.00 Total $$$1,230,000.00 Total $1,230,000.00 Step 4 and 6 Totals Must Match Debt Application of Overhead Account Title WIP Inventory Manufacturing OH Conversion (DL+OH) Ending WIP Direct Materials Conversion (DL+OH) $638,000 $645,270 -$7,270 Application Rate (x) 12.50 Conversion (DL+OH) 4 80,000 12,000 4 92,000 S6: Reconcile Transfer Out Credit Budgeted Overhead (Divide) Budgeted Cost Machine Hrs Budgeted Activity Level (Main Idea Cost) Applied Overhead $781,250.00 (=) Total Job #DIV/0! Percentage Completed Direct Materials 100% Conversion (DL+OH) 4 0% Units (Step 1 & 2 Must Match) Direct Materials 4 80,000 30,000 510,000 Cost Equivalent Units (eq) Total $645,270.00 Disposal Varience A ccount Title Cost of Goods Sold Manufacturing OH $- Units 4 80,000 30,000 510,000 S5: Get Per Unit Cost Total $820,620.00 Positive Outcome = Underapplied Negative Outcome = Overapplied Total $Total Account for Them Completed & Shipped Out WIP Ending Inventory (=) Units to Account For S3: Equivalent Units Completed & Shipped Out WIP Ending Inventory (=) Units to Account For $645,270.00 Over Applied or Under Applied Actual Overhead (-) Applied OH Total (Disposal of Varienace) Positive Outcome = Underapplied Negative Outcome = Overapplied Total $642,000.00 $775,500 $550,000 Actual Activity Level Actual Direct Labor $582,000 Application Rate (x) 8.22 Applied Overhead $645,270.00 Credit Over Applied or Under Applied Actual Overhead (-) Applied OH Total (Disposal of Varienace) $373,000.00 Example Problem Application Rate Budgeted Overhead Budgeted Cost Machine Hrs Budgeted Activity Level (Main Idea Cost) Application Rate (x) 1.41 Applied Overhead = #DIV/0! (Divide) $- Budgeted Overhead (Divide) Budgeted Cost Machine Hrs Budgeted Activity Level (Main Idea Cost) Total Rate # DIV/0! Actual Activity Level Actual Direct Labor Application Rate (x) # DIV/0! A pplied Overhead $$Conversion (DL+OH) $$- Total S4: Get the $$ Amounts Direct Materials Spent $ Last Month Spent $ This Month Total $600,000.00 A pplication Rate Total #DIV/0! Rate # DIV/0! # DIV/0! Subtotal Review Process for Mid-Term - I did it right S1: Units to Account For: Units Percentage Completed Beginning WIP Inventory 10,000 Direct Materials FIFO Style (+) Units Started 500,000 Conversion (DL+OH) (=) Units to Account For 510,000 Units (Step 1 & 2 Must Match) Total Rate 822% Q5 Total #DIV/0! Step 4 and 6 Totals Must Match $360,000 18,000 18,650 Application Rate Application Rate $624,720 $76,000 Actual Activity Level Actual Direct Labor Q4 See Paper RATE #DIV/0! Rate # DIV/0! Units - Ending WIP Direct Materials Conversion (DL+OH) Actual Direct Labor Total Factory Overhead $92,500.00 $740,000.00 8.00 Total $$$- Units - S6: Reconcile Transfer Out Problem: Mod 2 C1 Application of Overhead Application Rate Q3 Budgeted Overhead Budgeted Cost Machine Hrs Budgeted Activity Level (Main Idea Cost) Application Rate (x) 8.22 A pplied Overhead = Direct Materials $#DIV/0! Sample Cost Equivalent Units (eq) Total Total $411,500.00 Step 4 and 6 Totals Must Match (Divide) Applied Overhead = Conversion (DL+OH) - S4: Get the $$ Amounts Spent $ Last Month Spent $ This Month Total Total $402,500.00 Direct Materials - RATE $2.30 Problem: Mod 2 B1 Application Rate (Divide) Percentage Completed Direct Materials Conversion (DL+OH) Units (Step 1 & 2 Must Match) S3: Equivalent Units Completed & Shipped Out WIP Ending Inventory (=) Units to Account For Total $5,500.00 $406,000.00 $411,500.00 $ XX,XXX XXX,XXX Units Conversion (DL+OH) $356,000.00 178,000 $2.00 Sample Test 2 Q2 Application Rate Units (Divide) Direct Materials $55,500.00 185,000 $0.30 Cost Equivalent Units (eq) Total S6: Problem S1: Units to Account For: Beginning WIP Inventory (+) Units Started (=) Units to Account For Conversion (DL+OH) 4 20 $12.40 $5,208.00 Conversion (DL+OH) 1,210 $12.40 $15,004.00 Total $15,288 Total $49,852 Total $94,830.00 $108,850.00 $203,680.00 Total $169.31 Application Rate (Divide) Budgeted Overhead Budgeted Cost Machine Hrs Actual Activity Level Applied Overhead = Application Rate (x) 10.00 $1,000,000 $100,000 Actual Activity Level Actual Direct Labor $12,317 Total Rate 10 Total $123,170.00 Traditional or Absorbtion Method Revenues (-) CGS Gross Margin (-) Operations Expenses (=) Net Income Unit 500 500 500 Total $62,500 $33,910 $28,590 $20,000 $8,590 Difference of 50 units Legend Variable Cost is the Sum of: DM - Direct Materials DL -Direct Labor VOH - Variable OH VS&A - Variable Sales & Administration Contribution Margin Total $302,400 $172,800 $129,600 $70,000 $59,600 Per Unit $16.80 $9.60 $7.20 Starting Units Change of Units 20,000 10% Start Price Change $15.00 12% Unit 1,400 1,400 1,400 Total $21,000 $16,800 $4,200 $4,200 $- Per Unit $15.00 $12.00 $3.00 Starting Units Change of Units Total $15,000 $12,000 $3,000 $4,200 $(1,200) Per Unit Perc. Sales $15.00 100% $12.00 $3.00 20% CM Ratio $100,000,000.00 Target Profit Unit $1,090.00 Unit 18,000 18,000 18,000 Unit Revenues (-) Var Cost Contribution Margin (-) Fixed Cost (=) Net Income Total Per Unit Rev/Percent $120.00 100% $80.00 $40.00 33% CM Ratio $10,000.00 Target Profit Break Even Revenues (-) Var Cost $4,200 Contribution Margin $3.00 (-) Fixed Cost 1400 (=) Net Income Fixed cost (diveded by) Contribution Margin per unit Breakeven Point Fixed Cost is the Sum of: FOH - Fixed Overhead FS&A - Sales & Administration DM Dl VOH FOH Per Unit $125.00 $67.82 $57.18 SALES Volumes (Rev) Units Dollar per Unit 1,400 $15.00 $21,000.00 20 17 9 12000 Unit Revenues (-) Var Cost Contribution Margin (-) Fixed Cost (=) Net Income Start Price Change Break Even Revenues (-) Var Cost $4,200 Contribution Margin 20% (-) Fixed Cost $21,000.00 (=) Net Income Contribution Margin Ratio Fixed cost (diveded by) Contribution Margin Ratio Breakeven Point Fixed cost (diveded by)+ Desired Profit Contribution Margin per unit Breakeven Point 100,004,200.00 3.00 33,334,733.33 Units Contribution Margin E6-8 pg 264 Revenues (-) Var Cost $50,000 Contribution Margin 33% (-) Fixed Cost $150,000.00 (=) Net Income Contribution Margin Ratio Fixed cost (diveded by) Contribution Margin Ratio Breakeven Point Fixed cost (diveded by)+ Desired Profit Contribution Margin per unit Breakeven Point $50,000 $(50,000) 60,000.00 40.00 1,500.00 Units Margin of Safety Formula Sales Breakeven Sales Margin of Safety in Dollars Margin of Safety Percentage Margin of Safety Formula Sales Breakeven Sales Volume Margin of Safety in Dollars Margin of Safety Percentage Pg 253 $100,000.00 $87,000.00 $13,000.00 87% (=) Margin of Sales 22000 (=) 7500 (=) $30,000 #DIV/0! Bog Contribution Margin (divided) Net Operating Income (=) Degree Of Operating Leverage 40000 Sterlin 10000 48000 10000 4.8 4 Unit Fixed cost (diveded by)+ Desired Profit Contribution Margin per unit Breakeven Point Total $34,000 $33,600 $50,400 $38,000 $12,400 Per Unit Unit 500 500 500 Total $62,500 $25,000 $37,500 $30,000 $7,500 Per Unit Perc. Sales $125.00 $50.00 $75.00 Unit 20,000 20,000 20,000 Total $1,000,000 $440,000 $560,000 $490,000 $70,000 Per Unit Perc. Sales $50.00 $22.00 $28.00 Revenues (-) Var Cost $38,000 Contribution Margin 60% (-) Fixed Cost $63,333.33 (=) Net Income 38,000.00 #DIV/0! Units Contribution Margin (divided) Net Operating Income (=) Degree Of Operating Leverage Perc. Sales $- 100% 40% 60% CM Ratio Target Profit #DIV/0! Mod b-6 Contribution Margin Ratio Fixed cost (diveded by) Contribution Margin Ratio Breakeven Point Contribution Margin Number Fixed cost (diveded by) Contribution Margin Number Breakeven Point (units) Degree of Leverage Contribution Margin (divided) Net Operating Income (=) Degree Of Operating Leverage Revenues (-) Var Cost $30,000 Contribution Margin 80% (-) Fixed Cost $37,500.00 (=) Net Income 100% 20% 80% CM Ratio Target Profit $37,500 $7,500 5.00 $37,500 $7,500 5 e7-5 Contribution Margin Ratio Fixed cost (diveded by) Contribution Margin Ratio Breakeven Point Contribution Margin Number Fixed cost (diveded by) Contribution Margin Number Breakeven Point (units) Degree of Leverage Contribution Margin (divided) Net Operating Income (=) Degree Of Operating Leverage Revenues (-) Var Cost $490,000 Contribution Margin 0% (-) Fixed Cost #DIV/0! (=) Net Income $560,000 $70,000 8.00 $560,000 $70,000 8 70000 10000 7 e6-9 Contribution Margin Ratio Fixed cost (diveded by) Contribution Margin Ratio Breakeven Point (=) 25% $30,000.00 0% Contribution Margin (divided) Net Operating Income (=) Degree Of Operating Leverage E6-9 E6-8 pg 266 Budgeted Sales (-)Sales 30000 (1000*$30) (750*$30) $30,000.00 CM Ratio Target Profit Total 100,000.00 300,000.00 700,000.00 500,000.00 200,000.00 Per Unit 10.00 3.00 7.00 30000 19000 Mod 3.1 Mod 3.1 A1- Contribution Margin Mod 3.1 TEST 1.1 - Contribution Margin . Contribution Margin Contribution Margin Total $150,000 $79,000 $71,000 $40,000 $31,000 Per Unit Total $ 400,000 $140,000 $105,000 $ 245,000 $ 155,000 $ 70,000 $85,000 Per Unit Mod 3.1 TEST 2.2 - Contribution Margin . Contribution Margin Per Unit Total $500,000 $320,000 $180,000 $100,000 $80,000 Revenues (-) Var Cost Contribution Margin (-) Fixed Cost (=) Net Income Total Revenues (-) Var Cost Total VC Contribution Margin Revenues (-) Var Cost Contribution Margin (-) Fixed Cost (=) Net Income Total Fixed Cost (=) Net Income (=) Total Var Cost Contribution Margin Fixed Overhead Fixed General and administrative $ 200 $67.00 $15.00 $5.00 $3 $$$20,000 $35,000 Total VC Contribution Margin $ 1,767,000 $ 2,683,000 $500,000 $450,000 $600,000 $ 1,550,000 $ 1,133,000 Total VC Contribution Margin (=) Total Fixed Cost (=) Net Income (=) Total Var Cost Contribution Margin (-) Fixed Cost Fixed Overhead Fixed General and administrative Total Fixed Cost (=) Net Income (=) Total Fixed Cost (=) Net Income $ 19 For Break Even the Value is Always ZERO $ - Target Profit Per Unit $ 200,100 $ 29 $8.50 $6.50 $7.50 $2.50 (=) Total Var Cost Contribution Margin (-) Fixed Cost Fixed Overhead Fixed General and administrative # DIV/0! CM Ratio Total $ 0.30 CM/Unit Total $ 172,500.00 $ 27,600.00 $ 25.00 $ 4.00 13.79% CM/Unit Percent $40.00 $8.00 $12.00 $10.00 $3.00 $9.00 10,000 9,400 $90.00 per unit per unit per unit per unit per unit sold per unit per month per unit Contribution Margin Ratio Per Unit Fixed cost (diveded by)+ Desired Profit Contribution Margin per unit Breakeven Point Contribution Margin Ratio Fixed cost (diveded by)+ Desired Profit Contribution Margin per Unit Perccent Breakeven Point (Units to Make) Mod 3.1 TEST 1.5 - Breakeven Point In Units $ 17 For Break Even the Value is Always ZERO $ 26,000.00 Target Profit $ 170,000.00 FC*Units Produced $20.00 $9.00 $5.00 $10.00 $1.00 $7.00 10,000 9,000 $70.00 $26,000 per unit per month $ 240,000.00 $ 80,000.00 $ 94.00 $ 106.00 $ 17.50 $ 22.00 $$10,000 per month 9,500 $$- $ 40 For Break Even the Value is Always ZERO $ 400,000.00 Target Profit $ 395,000.00 FC*Units Produced Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio $ 20.00 $ 30.00 $ 30,000 $7,500 550 per month 500 Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio Contribution Margin Ratio Per Unit Fixed cost (diveded by)+ Desired Profit Contribution Margin per unit Breakeven Point Contribution Margin Ratio Fixed cost (diveded by)+ Desired Profit Contribution Margin per Unit Perccent Breakeven Point (Units to Make) 16,500,000.00 $75.00 220,000.00 16,500,000.00 0.6000 27,500,000.00 $ 50.00 $ 75.00 60.00% Per Unit $ 474,000.00 $ 395,000.00 Degree of Leverage Contribution Margin (divided) $37,500 Net Operating Income $7,500 (=) Degree Of Operating Leverage 5.00 For Break Even the Value is Always ZERO $ - Target Profit $ 16,500,000.00 FC*Units Produced Harry's Harmonicas, Inc., October Production Activity Direct Materials $20.00 per Direct Labor $17.00 per Variable Overhead $9.00 per Variable Selling $4.00 per Fixed Overhead $12,000 per Fixed General and administrative $18,000 per Units Produced 550 per Units in beginnning finished goods Units Sold 500 Selling Price $125.00 per unit Funky Fur Fedoras, June Production Activity Direct Materials $75.00 Direct Labor $15.00 Variable Overhead $17.00 Fixed Overhead $22.00 Variable Selling $13.00 Fixed General and administrative $23.00 Units Produced 4,000 Units in beginnning finished goods Units Sold 3,950 Selling Price $220.00 T arget Profit $200,000 380,000.00 $100.00 $3,800.00 380,000.00 0.4545 836,000.00 Total $ 735,000 Per Unit $ 1,500 $60.00 $190.00 $17.00 $33.00 $ 147,000.00 $ 588,000.00 $ 300.00 $ 1,200.00 80.00% CM/Unit Percent per per per per per per per unit unit unit unit unit unit month per unit per month Margin of Safety Formula Sales $735,000.00 Breakeven Sales $637,500.00 Margin of Safety in Dollars $97,500.00 Margin of Safety Percentage 87% Degree of Leverage Contribution Margin (divided) $588,000 Net Operating Income $587,980 (=) Degree Of Operating Leverage 1.00 For Break Even the Value is Always ZERO $ 500,000.00 Target Profit $ 10,000.00 FC*Units Produced $ 20 $587,980 500 per month 4 90 Artists Abound June Production Activity Direct Materials $60.00 per unit Direct Labor $190.00 per unit Variable Overhead $17.00 per unit Fixed Overhead $8.00 per unit Variable Selling $33.00 per unit Fixed General and administrative $12.00 per unit Units Produced 500 per month Units in beginnning finished goods Units Sold 490 Selling Price $1,500.00 per unit T arget Profit $500,000 per month Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio Contribution Margin Ratio Per Unit Fixed cost (diveded by)+ Desired Profit Contribution Margin per unit Breakeven Point Contribution Margin Ratio Fixed cost (diveded by)+ Desired Profit Contribution Margin per Unit Perccent Breakeven Point (Units to Make) Mod 3.1 TEST 1.8 - Breakeven Point In Units to Sell 510,000.00 $1,200.00 $425.00 510,000.00 0.8000 637,500.00 Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Overhead Variable Selling Per Unit $ 780,000 $ 100 $35.00 $12.00 $7.00 $6.00 $ 468,000.00 $ 312,000.00 $ 60.00 $ 40.00 40.00% CM/Unit Percent Margin of Safety Formula Sales $780,000.00 Breakeven Sales $700,000.00 Margin of Safety in Dollars $80,000.00 Margin of Safety Percentage 90% Degree of Leverage Contribution Margin (divided) $312,000 Net Operating Income $311,965 (=) Degree Of Operating Leverage 1.00 $ 18.00 $ 17.00 For Break Even the Value is Always ZERO $ - Target Profit $ 280,000.00 FC*Units Produced $ 35 $311,965 8,000 per month 7,800 Sensational Sundries Inc., February Production Activity Direct Materials $35.00 per unit Direct Labor $12.00 per unit Variable Overhead $7.00 per unit Fixed Overhead $18.00 per unit Variable Selling $6.00 per unit Fixed General and administrative $17.00 per unit Units Produced 8,000 per month Units in beginnning finished goods Units Sold 7,800 Selling Price $100.00 per unit Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio Contribution Margin Ratio Per Unit Fixed cost (diveded by)+ Desired Profit Contribution Margin per unit Breakeven Point Contribution Margin Ratio Fixed cost (diveded by)+ Desired Profit Contribution Margin per Unit Perccent Breakeven Point (Units to Make) Mod 3.1 TEST 1.9 - Breakeven Point In Units to Sell 280,000.00 $40.00 $7,000.00 280,000.00 0.4000 7 00,000.00 Total Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Overhead Variable Selling $ 200,000 Per Unit $ 1,000 $250.00 $60.00 $30.00 $35.00 $ 75,000.00 $ 125,000.00 $ 375.00 $ 625.00 62.50% CM/Unit Percent Margin of Safety Formula Sales $200,000.00 Breakeven Sales $42,000,000.00 Margin of Safety in Dollars $(41,800,000.00) Margin of Safety Percentage 21000% Degree of Leverage Contribution Margin (divided) $125,000 Net Operating Income $20,000 (=) Degree Of Operating Leverage 6.25 $ 55,000.00 $ 50,000.00 (=) Total Fixed Cost (=) Net Income Units Produced Units Sold For Break Even the Value is Always ZERO $ - Target Profit $ 26,250,000.00 FC*Units Produced $ 105,000 $20,000 250 per month 200 Fancy Furniture Inc., October Production Activity Direct Materials $250.00 per unit Direct Labor $60.00 per unit Variable Overhead $30.00 per unit Variable Selling $35.00 per unit Fixed Overhead $55,000 per month Fixed General and administrative $50,000 per month Units Produced 250 per month Units in beginnning finished goods Units Sold 200 Selling Price $1,000.00 per unit Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio Contribution Margin Ratio Per Unit Fixed cost (diveded by)+ Desired Profit Contribution Margin per unit Breakeven Point Contribution Margin Ratio Fixed cost (diveded by)+ Desired Profit Contribution Margin per Unit Perccent Breakeven Point (Units to Make) 26,250,000.00 $625.00 $42,000.00 26,250,000.00 0.6250 4 2,000,000.00 Midterm Q3 Total Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Overhead Variable Selling Per Unit $- $$$$$- (=) Total Var Cost Contribution Margin (-) Fixed Cost Fixed Overhead Fixed General and administrative $$- $$#DIV/0! CM/Unit Percent (=) Total Fixed Cost (=) Net Income Units Produced Units Sold Margin of Safety Formula Sales $Breakeven Sales #DIV/0! Margin of Safety in Dollars #DIV/0! Margin of Safety Percentage #DIV/0! Degree of Leverage Contribution Margin (divided) $Net Operating Income $(=) Degree Of Operating Leverage #DIV/0! $$- For Break Even the Value is Always ZERO $ - Target Profit $ - FC*Units Produced $$- per month Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio Contribution Margin Ratio Per Unit Fixed cost (diveded by)+ Desired Profit Contribution Margin per unit Breakeven Point Contribution Margin Ratio Fixed cost (diveded by)+ Desired Profit Contribution Margin per Unit Perccent Breakeven Point (Units to Make) $#DIV/0! #DIV/0! #DIV/0! Fancy Furniture Inc., October Production Activity Direct Materials per unit Direct Labor per unit Variable Overhead per unit Variable Selling per unit Fixed Overhead per month Fixed General and administrative per month Units Produced per month Units in beginnning finished goods Units Sold Selling Price per unit Per Unit $ 165,000 $ 30 $9.00 $8.00 $7.00 $2.00 (=) Total Var Cost Contribution Margin (-) Fixed Cost Fixed Overhead Fixed General and administrative $ 143,000.00 $ 22,000.00 $ 26.00 $ 4.00 13.33% CM/Unit Percent $ 260,000 $60,000 25,000 per month 20,000 Contribution Margin Ratio Per Unit Fixed cost (diveded by) Contribution Margin per unit Breakeven Point Contribution Margin Ratio Fixed cost (diveded by)+ Desired Profit Contribution Margin per Unit Perccent Breakeven Point (Units to Make) Degree of Leverage Contribution Margin (divided) Net Operating Income (=) Degree Of Operating Leverage $320,000 $60,000 5.33 For Break Even the Value is Always ZERO $ - Target Profit Susies Discount Sundresses, March Production Activity Direct Materials $20.00 per Direct Labor $4.00 per Variable Overhead $6.00 per Fixed Overhead $150,000.00 per Variable Selling $4.00 per Fixed General and administrative $110,000.00 per Units Produced 25,000 per Units in beginnning finished goods Units Sold 20,000 Selling Price $50.00 per 260,000.00 $16.00 16,250.00 0.3200 - Contribution Margin Ratio Per Unit Fixed cost (diveded by) Contribution Margin per unit Breakeven Point 7 ,500.00 $4.00 1,875.00 Contribution Margin Ratio Fixed cost (diveded by)+ Desired Profit Contribution Margin per Unit Perccent Breakeven Point (Units to Make) Mod 3.1 TEST 1.5 - Breakeven Point In Revenue $ 0.1333 Total Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Overhead Variable Selling Per Unit $ 940,000 $ 100 $23.00 $13.00 $14.00 $6.00 $ 526,400.00 $ 413,600.00 $ 56.00 $ 44.00 44.00% CM/Unit Percent For Break Even the Value is Always ZERO $ - Target Profit $ 330,000.00 FC*Units Produced 330,000.00 $44.00 $7,500.00 330,000.00 0.4400 7 50,000.00 Total Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Overhead Variable Selling Per Unit $ 1,575,000 $ 350 $125.00 $24.00 $19.00 $22.00 $ 855,000.00 $ 720,000.00 $ 190.00 $ 160.00 45.71% CM/Unit Percent Degree of Leverage Contribution Margin (divided) $720,000 Net Operating Income $719,950 (=) Degree Of Operating Leverage 1.00 For Break Even the Value is Always ZERO $ 350,000.00 Target Profit $ 250,000.00 FC*Units Produced Funky Fur Fedoras, June Production Activity Direct Materials $125.00 Direct Labor $24.00 Variable Overhead $19.00 Fixed Overhead $27.00 Variable Selling $22.00 Fixed General and administrative $23.00 Units Produced 5,000 Units in beginnning finished goods Units Sold 4,500 Selling Price $350.00 T arget Profit $350,000 Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio Contribution Margin Ratio Per Unit Fixed cost (diveded by)+ Desired Profit 600,000.00 Contribution Margin per unit $160.00 Breakeven Point $3,750.00 Contribution Margin Ratio Fixed cost (diveded by)+ Desired Profit 600,000.00 Contribution Margin per Unit Perccent 0.4571 Breakeven Point (Units to Make) 1,312,500.00 Mod 3.1 TEST 1.7 - Level of Sales Requried (in $) To Reach Target Profit Total Revenues $ 367,500 (-) Vararible Cost Direct Materials Direct Labor Variable Overhead Variable Selling Per Unit $ 750 $50.00 $190.00 $20.00 $40.00 $ 147,000.00 $ 220,500.00 $ 300.00 $ 450.00 60.00% CM/Unit Percent per per per per per per per unit unit unit unit unit unit month per unit per month Margin of Safety Formula Sales $367,500.00 Breakeven Sales $360,000.00 Margin of Safety in Dollars $7,500.00 Margin of Safety Percentage 98% Degree of Leverage Contribution Margin (divided) $220,500 Net Operating Income $220,468 (=) Degree Of Operating Leverage 1.00 $ 12.00 $ 20.00 (=) Total Fixed Cost (=) Net Income Units Produced Units Sold For Break Even the Value is Always ZERO $ 200,000.00 Target Profit $ 16,000.00 FC*Units Produced $ 32 $220,468 500 per month 4 90 Artists Abound June Production Activity Direct Materials $50.00 per unit Direct Labor $190.00 per unit Variable Overhead $20.00 per unit Fixed Overhead $12.00 per unit Variable Selling $40.00 per unit Fixed General and administrative $20.00 per unit Units Produced 500 per month Units in beginnning finished goods Units Sold 490 Selling Price $750.00 per unit T arget Profit $200,000 per month Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio Contribution Margin Ratio Per Unit Fixed cost (diveded by)+ Desired Profit Contribution Margin per unit Breakeven Point Contribution Margin Ratio Fixed cost (diveded by)+ Desired Profit Contribution Margin per Unit Perccent Breakeven Point (Units to Make) Mod 3.1 TEST 1.8 - Breakeven Point In Units to Sell 216,000.00 $450.00 $480.00 216,000.00 0.6000 360,000.00 Total Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Overhead Variable Selling Per Unit $ 2,035,000 $ 185 $50.00 $15.00 $4.00 $4.00 $ 803,000.00 $ 1,232,000.00 CM/Unit Percent $ 13.00 $ 15.00 (=) Total Fixed Cost (=) Net Income Units Produced Units Sold $ 73.00 $ 112.00 60.54% 336,000.00 $112.00 $3,000.00 336,000.00 0.6054 555,000.00 Total Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Overhead Variable Selling Per Unit $ 255,000 $ 500 $130.00 $30.00 $20.00 $20.00 $ 102,000.00 $ 153,000.00 CM/Unit Percent (=) Total Fixed Cost (=) Net Income Units Produced Units Sold $ 200.00 $ 300.00 60.00% Margin of Safety Formula Sales $255,000.00 Breakeven Sales $117,000,000.00 Margin of Safety in Dollars $(116,745,000.00) Margin of Safety Percentage 45882% Degree of Leverage Contribution Margin (divided) $153,000 Net Operating Income $36,000 (=) Degree Of Operating Leverage 4.25 $ 67,000.00 $ 50,000.00 $ 117,000 $36,000 600 per month 510 Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio Contribution Margin Ratio Per Unit Fixed cost (diveded by)+ Desired Profit Contribution Margin per unit Breakeven Point Contribution Margin Ratio Fixed cost (diveded by)+ Desired Profit Contribution Margin per Unit Perccent Breakeven Point (Units to Make) Degree of Leverage Contribution Margin (divided) $1,232,000 Net Operating Income $1,231,972 (=) Degree Of Operating Leverage 1.00 Sensational Sundries Inc., February Production Activity Direct Materials $50.00 per unit Direct Labor $15.00 per unit Variable Overhead $4.00 per unit Fixed Overhead $13.00 per unit Variable Selling $4.00 per unit Fixed General and administrative $15.00 per unit Units Produced 12,000 per month Units in beginnning finished goods Units Sold 11,000 Selling Price $185.00 per unit Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio Contribution Margin Ratio Per Unit Fixed cost (diveded by)+ Desired Profit Contribution Margin per unit Breakeven Point Contribution Margin Ratio Fixed cost (diveded by)+ Desired Profit Contribution Margin per Unit Perccent Breakeven Point (Units to Make) Mod 3.1 TEST 1.9 - Breakeven Point In Units to Sell Margin of Safety Formula Sales $2,035,000.00 Breakeven Sales $555,000.00 Margin of Safety in Dollars $1,480,000.00 Margin of Safety Percentage 27% For Break Even the Value is Always ZERO $ - Target Profit $ 336,000.00 FC*Units Produced $ 28 $1,231,972 12,000 per month 11,000 (=) Total Var Cost Contribution Margin (-) Fixed Cost Fixed Overhead Fixed General and administrative Margin of Safety Formula Sales $1,575,000.00 Breakeven Sales $1,312,500.00 Margin of Safety in Dollars $262,500.00 Margin of Safety Percentage 83% 7 0,200,000.00 $300.00 $234,000.00 7 0,200,000.00 0.6000 117,000,000.00 For Break Even the Value is Always ZERO $ - Target Profit $ 70,200,000.00 FC*Units Produced Fancy Furniture Inc., October Production Activity Direct Materials $130.00 per unit Direct Labor $30.00 per unit Variable Overhead $20.00 per unit Variable Selling $20.00 per unit Fixed Overhead $67,000 per month Fixed General and administrative $50,000 per month Units Produced 600 per month Units in beginnning finished goods Units Sold 510 Selling Price $500.00 per unit Per Unit $ 60 $25.00 $10.00 $8.00 $8.00 (=) Total Var Cost Contribution Margin (-) Fixed Cost Fixed Overhead Fixed General and administrative $ 1,020,000.00 $ 180,000.00 CM/Unit Percent $ 160,000.00 $ 125,000.00 $ 51.00 $ 9.00 15.00% $ 285,000 $(105,000) 25,000 per month 20,000 unit unit unit month unit month month unit Contribution Margin Ratio Per Unit Fixed cost (diveded by) Contribution Margin per unit Breakeven Point 285,000.00 $9.00 31,666.67 Contribution Margin Ratio Fixed cost (diveded by)+ Desired Profit Contribution Margin per Unit Perccent Breakeven Point (Units to Make) Mod 3.2 PRE-TEST 2 0.1500 Total $ 1,200,000 Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Overhead Variable Selling Per Unit $ 60 $18.00 $7.00 $4.00 $5.00 (=) Total Var Cost Contribution Margin (-) Fixed Cost Fixed Overhead Fixed General and administrative $ 680,000.00 $ 520,000.00 CM/Unit Percent $ 150,000.00 $ 110,000.00 $ 34.00 $ 26.00 43.33% $ 260,000 $260,000 25,000 per month 20,000 Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio Contribution Margin Ratio Per Unit Fixed cost (diveded by) Contribution Margin per unit Breakeven Point Contribution Margin Ratio Fixed cost (diveded by)+ Desired Profit Contribution Margin per Unit Perccent Breakeven Point (Units to Make) 260,000.00 $26.00 10,000.00 0.4333 - Margin of Safety Formula Sales $1,200,000.00 Breakeven Sales $Margin of Safety in Dollars $1,200,000.00 Margin of Safety Percentage 0% Degree of Leverage Contribution Margin (divided) Net Operating Income (=) Degree Of Operating Leverage Per Unit $2.50 $180,000 $(105,000) -1.71 For Break Even the Value is Always ZERO $ - Target Profit Susies Discount Sundresses, March Production Activity Direct Materials $25.00 Direct Labor $10.00 Variable Overhead $8.00 Fixed Overhead $160,000.00 Variable Selling $8.00 Fixed General and administrative $125,000.00 Units Produced 25,000 Units in beginnning finished goods Units Sold 20,000 Selling Price $60.00 Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio (=) Total Fixed Cost (=) Net Income Units Produced Units Sold $ 27.00 $ 23.00 $ 50 $719,950 5,000 per month 4 ,500 (=) Total Var Cost Contribution Margin (-) Fixed Cost Fixed Overhead Fixed General and administrative Degree of Leverage Contribution Margin (divided) $413,600 Net Operating Income $413,567 (=) Degree Of Operating Leverage 1.00 Classy Clown Costumes, Inc., September Production Activity Direct Materials $23.00 per unit Direct Labor $13.00 per unit Variable Overhead $14.00 per unit Fixed Overhead $15.00 per unit Variable Selling $6.00 per unit Fixed General and administrative $18.00 per unit Units Produced 10,000 per month Units in beginnning finished goods Units Sold 9,400 Selling Price $100.00 per unit Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio Contribution Margin Ratio Per Unit Fixed cost*Unit Prod + Desired Profit Contribution Margin per unit Breakeven Point Contribution Margin Ratio Fixed cost (diveded by)+ Desired Profit Contribution Margin per Unit Perccent Breakeven Point (Units to Make) Mod 3.1 TEST 1.6 - Units Needed to Sell (=) Total Var Cost Contribution Margin (-) Fixed Cost Fixed Overhead Fixed General and administrative Margin of Safety Formula Sales $940,000.00 Breakeven Sales $750,000.00 Margin of Safety in Dollars $190,000.00 Margin of Safety Percentage 80% $ 15.00 $ 18.00 $ 33 $413,567 10,000 per month 9,400 Total $ 1,200,000 Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Overhead Variable Selling (=) Total Fixed Cost (=) Net Income Units Produced Units Sold Susies Discount Sundresses, March Production Activity Direct Materials $9.00 per unit Direct Labor $8.00 per unit Variable Overhead $7.00 per unit Fixed Overhead $3,500.00 per month Variable Selling $2.00 per unit Fixed General and administrative $4,000.00 per month Units Produced 6,000 per month Units in beginnning finished goods Units Sold 5,500 Selling Price $30.00 per unit Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio (=) Total Var Cost Contribution Margin (-) Fixed Cost Fixed Overhead Fixed General and administrative Degree of Leverage Contribution Margin (divided) $22,000 Net Operating Income $14,500 (=) Degree Of Operating Leverage 1.52 For Break Even the Value is Always ZERO $ - Target Profit $ 7,500 $14,500 6,000 per month 5,500 (=) Total Var Cost Contribution Margin (-) Fixed Cost Fixed Overhead Fixed General and administrative Margin of Safety Formula Sales $165,000.00 Breakeven Sales $Margin of Safety in Dollars $165,000.00 Margin of Safety Percentage 0% $ 3,500.00 $ 4,000.00 (=) Total Fixed Cost (=) Net Income Units Produced Units Sold $ 8.00 $ 12.00 (=) Total Fixed Cost (=) Net Income Units Produced Units Sold (=) Total Var Cost Contribution Margin (-) Fixed Cost Fixed Overhead Fixed General and administrative Degree of Leverage Contribution Margin (divided) $395,000 Net Operating Income $394,955 (=) Degree Of Operating Leverage 1.00 For Break Even the Value is Always ZERO $ 200,000.00 Target Profit $ 180,000.00 FC*Units Produced $ 45 $394,955 4 ,000 per month 3,950 (=) Total Var Cost Contribution Margin (-) Fixed Cost Fixed Overhead Fixed General and administrative Margin of Safety Formula Sales $869,000.00 Breakeven Sales $836,000.00 Margin of Safety in Dollars $33,000.00 Margin of Safety Percentage 96% $ 22.00 $ 23.00 (=) Total Fixed Cost (=) Net Income Units Produced Units Sold unit unit unit unit month month month $ 120.00 $ 100.00 45.45% CM/Unit Percent Total Margin of Safety Formula Sales $62,500.00 Breakeven Sales $27,500,000.00 Margin of Safety in Dollars $(27,437,500.00) Margin of Safety Percentage 44000% $ 220 $75.00 $15.00 $17.00 $13.00 (=) Total Var Cost Contribution Margin (-) Fixed Cost Fixed Overhead Fixed General and administrative # DIV/0! CM Ratio Total 0.60 CM/Unit Total For Break Even the Value is Always ZERO $ 20 $ - Target Profit $ 240,000.00 FC*Units Produced 12,000 per month 11,000 Music Makers, Inc., November Production Activity Direct Materials $14.00 per unit Direct Labor $2.00 per unit Variable Overhead $3.00 per unit Fixed Overhead $9.00 per unit Variable Selling $1.00 per unit Fixed General and administrative $11.00 per unit Units Produced 12,000 per month Units in beginnning finished goods Units Sold 11,000 Selling Price $50.00 per unit Contribution Margin Ratio Per Unit Fixed cost (diveded by)+ Desired Profit 240,000.00 Contribution Margin per unit $30.00 Units Breakeven Point 8,000.00 Contribution Margin Ratio Fixed cost (diveded by)+ Desired Profit 240,000.00 Contribution Margin per unit 0.6000 Ratio Breakeven Point (Units to Make) 4 00,000.00 Mod 3.1 B6 - CVP (Cost-Volume Profit Analysis (Degree of Leverage) Total Per Unit Revenues $ 62,500 $ 125 (-) Vararible Cost Direct Materials $20.00 Direct Labor $17.00 Variable Overhead $9.00 Variable Selling $4.00 $ 25,000.00 $ 37,500.00 CM/Unit Percent $ 12,000.00 $ 18,000.00 80,000.00 0.2500 320,000.00 (=) Total Fixed Cost (=) Net Income Units Produced Units Sold $ 9.00 $ 11.00 $$- 80,000.00 $8.00 $10,000.00 $ 869,000 Tom's Gold Emporium, June Production Activity Total FC+Target Profit (DIVIDED By) Direct Materials $60.00 per unit Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio Direct Labor $11.00 per unit Contribution Margin Ratio Variable Overhead $13.00 per unit Contribution Margin Ratio Per Unit Fixed Overhead $17.50 per unit Contribution Margin Ratio Per Unit Fixed cost (diveded by)+ Desired Profit 7 95,000.00 Variable Selling $10.00 per unit Fixed cost (diveded by)+ Desired Profit Contribution Margin per unit $106.00 Units Fixed General and administrative $22.00 per unit Contribution Margin per unit Breakeven Point 7 ,500.00 Units Produced 10,000 per month Breakeven Point Contribution Margin Ratio Units in beginnning finished goods Contribution Margin Ratio Fixed cost (diveded by)+ Desired Profit 7 95,000.00 Units Sold 9,500 Fixed cost (diveded by)+ Desired Profit Contribution Margin per unit 0.53 Ratio Selling Price $200.00 per unit Contribution Margin per Unit Perccent Breakeven Point (Units to Make) 1,500,000.00 Target Profit $400,000 per month Breakeven Point (Units to Make) Mod 3.1 B5 - CVP (Cost-Volume Profit Analysis (Margin of Safety) Mod 3.1 TEST 1.7 - Breakeven Point In Units to Sell Total Per Unit Margin of Safety Formula Revenues $ 50 Sales $550,000.00 Revenues (-) Vararible Cost Breakeven Sales $400,000.00 (-) Vararible Cost Direct Materials $14.00 Margin of Safety in Dollars $150,000.00 Direct Materials Direct Labor $2.00 Margin of Safety Percentage 73% Direct Labor Variable Overhead $3.00 Variable Overhead Variable Selling $1.00 Variable Selling (=) Total Fixed Cost (=) Net Income Units Produced Units Sold Margin of Safety Formula Sales $1,000,000.00 Breakeven Sales $Margin of Safety in Dollars $1,000,000.00 Margin of Safety Percentage 0% Mod 3.2 PRE-TEST 2 Total Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Overhead Variable Selling (=) Total Fixed Cost (=) Net Income Units Produced Units Sold Classy Clown Costumes, Inc., September Production Activity Direct Materials $9.50 per unit Direct Labor $5.00 per unit Variable Overhead $7.50 per unit Fixed Overhead $2.00 per unit Variable Selling $2.00 per unit Fixed General and administrative $6.00 per unit Units Produced 10,000 per month Units in beginnning finished goods Units Sold 10,000 Selling Price $32.00 per unit Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio Contribution Margin Ratio Per Unit Fixed cost (diveded by)+ Desired Profit Contribution Margin per unit Breakeven Point Contribution Margin Ratio Fixed cost (diveded by)+ Desired Profit Contribution Margin per Unit Perccent Breakeven Point (Units to Make) Mod 3.1 TEST 1.6 - Breakeven Point In Units to Sell (=) Total Var Cost Contribution Margin (-) Fixed Cost Fixed Overhead Fixed General and administrative # DIV/0! CM Ratio Total 0.53 CM/Unit Total Degree of Leverage Contribution Margin (divided) $80,000 Net Operating Income $79,992 (=) Degree Of Operating Leverage 1.00 For Break Even the Value is Always ZERO $ - Target Profit $ 80,000.00 FC*Units Produced $8 $79,992 10,000 per month 10,000 Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Overhead Variable Selling $60.00 $11.00 $13.00 $10.00 $ 24.00 $ 8.00 25.00% Margin of Safety Formula Sales $320,000.00 Breakeven Sales $320,000.00 Margin of Safety in Dollars $Margin of Safety Percentage 100% $ 2.00 $ 6.00 Total $ 200 $ 32 CM/Unit Percent (=) Total Fixed Cost (=) Net Income Units Produced Units Sold per unit per unit per unit per unit per unit per unit per month Per Unit $9.50 $5.00 $7.50 $2.00 Per Unit $$- 217,000,000.00 0.1379 1,573,250,000.00 $ 320,000 (=) Total Var Cost Contribution Margin (-) Fixed Cost Fixed Overhead Fixed General and administrative # DIV/0! CM Ratio Total 50% CM/Unit Total Chuck's Trucks, Inc., April Production Activity Direct Materials Direct Labor Variable Overhead Fixed Overhead Variable Selling Fixed General and administrative Units Produced Units in beginnning finished goods Units Sold Selling Price Target Profit 196,000.00 35.00 5,600.00 217,000,000.00 $4.00 54,250,000.00 Total $ 35 $ 35 $$10,000 per month 9,000 Mod 3.1 B4 - CVP (Cost-Volume Profit Analysis (Required Level of Sales Revenue) Total Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Overhead Variable Selling (=) Total Var Cost Contribution Margin (-) Fixed Cost Fixed Overhead Fixed General and administrative $ 34.00 $ 16.00 32.00% Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio 62.00% CM Ratio 0.6200 CM Ratio $ 250,000 $ 215,000 (=) Total Fixed Cost (=) Net Income Units Produced Units Sold Susies Discount Sundresses, March Production Activity Direct Materials $8.50 per unit Direct Labor $6.50 per unit Variable Overhead $7.50 per unit Fixed Overhead $17,000.00 per month Variable Selling $2.50 per unit Fixed General and administrative $14,000.00 per month Units Produced 7,000 per month Units in beginnning finished goods Units Sold 6,900 Selling Price $29.00 per unit Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Overhead Variable Selling $20.00 $9.00 $5.00 $1 Degree of Leverage Contribution Margin (divided) $27,600 Net Operating Income $(3,400) (=) Degree Of Operating Leverage -8.12 For Break Even the Value is Always ZERO $ - Target Profit $ 217,000,000.00 FC*Units Produced $ 31,000 $(3,400) 7,000 per month 6,900 Per Unit $ 70 Margin of Safety Formula Sales $200,100.00 Breakeven Sales $1,573,250,000.00 Margin of Safety in Dollars $(1,573,049,900.00) Margin of Safety Percentage 786232% $ 17,000.00 $ 14,000.00 (=) Total Fixed Cost (=) Net Income Units Produced Units Sold $ 10 $7 (=) Total Fixed Cost (=) Net Income Units Produced Units Sold (=) Total Fixed Cost (=) Net Income Units Produced Units Sold Mod 3.1 TEST 1.4 - Breakeven Point In Units Total Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Overhead Variable Selling $ 63 $ 27 $$- (=) Total Var Cost Contribution Margin (-) Fixed Cost Fixed Overhead Fixed General and administrative $ 680,000.00 $ 320,000.00 CM/Unit Percent $ 150,000.00 $ 110,000.00 Per Unit $ 285,000 $ 465,000 $100,000 $150,000 Total Fixed Cost (=) Net Income Mod 3.1 TEST 1.4 - Breakeven Point In Revenue $$$ $ 90 $40.00 $8.00 $12.00 $3 Direct Materials Direct Labor 190,000.00 Variable Overhead 0.30 Fixed Overhead 633,333.33 Variable Selling Fixed General and administrative Units Produced Units in beginnning finished goods Units Sold Selling Price Mod 3.1 B3 - CVP (Cost-Volume Profit Analysis (Required units Sold) Total Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Overhead Variable Selling (=) Total Fixed Cost (=) Net Income Units Produced Units Sold $20.00 $4.00 $6.00 $4.00 (=) Total Var Cost Contribution Margin (-) Fixed Cost Fixed Overhead Fixed General and administrative $ 750,000 $125,000 $90,000 $70,000 Total VC Contribution Margin 67.00% CM Ratio 0.6700 CM Ratio Boston Cell Tech, Inc., September Production Activity (=) Total Var Cost Contribution Margin (-) Fixed Cost Fixed Overhead Fixed General and administrative Total Revenues (-) Var Cost $ 420,000 $ 1,590,000 Per Unit $ 190,000 $(190,000) Contribution Margin Ratio Per Unit Fixed cost (diveded by)+ Desired Profit Contribution Margin per unit Breakeven Point (Units to Make) 4 0% CM Ratio 0.40 CM Ratio Per Unit $ 50 $67 per unit $15 per unit $5 per unit $20,000 per month $3 per unit sold $35,000 per month 6000 per month 5500 $200 per unit $ 10 $9 (=) Total Fixed Cost (=) Net Income Units Produced Units Sold Total $ 1,000,000 Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Overhead Variable Selling $ 295,000 $ 265,000 Per Unit $ 990,000 $ 2,010,000 $245,000 $175,000 Total Fixed Cost (=) Net Income Direct Materials Direct Labor Variable Overhead Fixed Overhead Variable Selling Fixed General and administrative Units Produced Units in beginnning finished goods Units Sold Selling Price $$- (=) Total Var Cost Contribution Margin (-) Fixed Cost Fixed Overhead Fixed General and administrative $ 260,000 $ 489,966 Mod 3.2 PRE-TEST PrintMed March Production Activity 55,000.00 110.00 500.00 Mod 3.1 B2 - CVP (Cost-Volume Profit Analysis (BREAKEVEN in Sales Dollars) Total Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Overhead Variable Selling Contribution Margin Ratio Per Unit Fixed cost (diveded by)+ Desired Profit Contribution Margin per unit Breakeven Point (Units to Make) Per Unit $ 1,400,000 $450,000 $245,000 $145,000 $ 840,000 $ 560,000 $195,000 $100,000 For Break Even the Value is Always ZERO $ - Target Profit $ 55,000 $(55,000) Contribution Margin Ratio Per Unit Fixed cost (diveded by)+ Desired Profit Contribution Margin per unit Breakeven Point (Units to Make) 60% CM Ratio 0.60 CM Ratio $ 3,000,000 $500,000 $295,000 $195,000 Total VC Contribution Margin # DIV/0! CM Ratio Total 55% CM Ratio Total 100.00% CM Ratio 1.0000 CM Ratio Mod 3.1 TEST 2.1 - Contribution Margin Contribution Margin Total Revenues (-) Var Cost $ 90 $ 110 Total Fixed Cost (=) Net Income Total Revenues (-) Var Cost Mod 3.1 TEST 1.3 - Contribution Margin Contribution Margin Per Unit $ 34 $ 749,966 $150,000 $110,000 Contribution Margin Per Unit $ 4,450,000 $467,000 $1,300,000 Total Fixed Cost (=) Net Income Mod 3.1 B1 - CVP (Cost-Volume Profit Analysis (BREAKEVEN in Units) Total Revenues VC - Direct Materials Direct Labor Variable Overhead Variable Selling $ 750,000 $20 $4 $6 $4 Total VC Contribution Margin Mod 3.1 TEST 2.3 - Contribution Margin Total Revenues (-) Var Cost 39% CM Ratio 0.39 CM Ratio Per Unit Revenues (-) Var Cost $ 745,000 $ 605,000 $270,000 $100,000 $110,000 $ 480,000 $ 125,000 Total Fixed Cost (=) Net Income Contribution Margin Revenues (-) Var Cost (-) Var Cost (=) Total Var Cost Contribution Margin (-) Fixed Cost (=) Net Income Per Unit $ 1,350,000 $245,000 $500,000 Total VC Contribution Margin Mod 3.1 TEST 1.2 - Contribution Margin Mod 3.1 A2 - Contribution Margin Ratio Total Total Revenues (-) Var Cost $ 595,000 $ 405,000 $170,000 $100,000 $110,000 $ 380,000 $ 25,000 Contribution Margin - Example Problem Mod 3.1 TEST 2.1 - Contribution Margin Contribution Margin Per Unit $ 1,000,000 $350,000 $245,000 per per per per per per per unit unit unit month unit month month per unit Margin of Safety Formula Sales $1,200,000.00 Breakeven Sales $Margin of Safety in Dollars $1,200,000.00 Margin of Safety Percentage 0% Degree of Leverage Contribution Margin (divided) Net Operating Income (=) Degree Of Operating Leverage $520,000 $260,000 2.00 For Break Even the Value is Always ZERO $ - Target Profit Susies Discount Sundresses, March Production Activity Direct Materials $18.00 per Direct Labor $7.00 per Variable Overhead $4.00 per Fixed Overhead $150,000.00 per Variable Selling $5.00 per Fixed General and administrative $110,000.00 per Units Produced 25,000 per Units in beginnning finished goods Units Sold 20,000 Selling Price $60.00 per unit unit unit month unit month month unit E8-4 Activity Cost Pool Support DL Machine Proccess Machine Setup Production Order Shipment Product Sustaining Units Produced DL Machine Proccess Machine Setup Production Order Shipment Product Sustaining Total Rate Rate type $6 $4 $50 $90 $14 shipment $840 per product K425 Total Rate 200 80 $480 100 400 1 50 1 90 1 14 1 840 $1,874.00 Per Unit M67 2000 500 1500 4 4 10 1 200 $9.37 $3,000 $6,000 $200 $360 $140 $840 $10,540 Per Unit 2000 $5.27 Application Rate (Divide) Budgeted Overhead Budgeted Cost Machine Hrs 100000 Applied Overhead = Example in Class Application Rate (x) 10.00 $1,000,000 $100,000 Actual Activity Level Actual Direct Labor $12,317 Total Rate 10 Total $123,170.00 Mod 3.2 Variable Costing Total $1,100,000 Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Overhead Variable Selling (=) Total Var Cost Contribution Margin (-) Fixed Cost Fixed Overhead Fixed General and administrative Per Unit $50 $18.00 $5.00 $4.00 $594,000.00 $506,000.00 CM/Unit Percent $160,000.00 $100,000.00 (=) Total Fixed Cost (=) Net Income U nits Produced Units Sold $27.00 $23.00 46.00% $506,000 $246,000 2.06 $27.00 For Break Even the Value is Always ZERO Target Profit Company Name Direct Materials $18.00 Direct Labor $5.00 Variable Overhead $4.00 Fixed Overhead $160,000.00 Variable Selling & Admin $6.00 Fixed General and administrative $100,000.00 U nits Produced 24,000 Units in beginnning finished goods U nits Sold 22,000 S elling Price $50.00 Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio 260,000.00 $23.00 11,304.35 Degree of Leverage Contribution Margin (divided) Net Operating Income (=) Degree Of Operating Leverage Variable Costing No Var Seing $260,000 $246,000 24,000 p er month 22,000 Contribution Margin Ratio Per Unit Fixed cost (diveded by) Contribution Margin per unit Breakeven Point Contribution Margin Ratio Fixed cost (diveded by)+ Desired Profit Contribution Margin per Unit Perccent Breakeven Point (Units to Make) Margin of Safety Formula S ales $1,100,000.00 Breakeven Sales $Margin of Safety in Dollars $1,100,000.00 Margin of Safety Percentage 0% Per Unit $2.12 0.4600 - per unit per unit per unit per month per unit per month per month per unit Mod 3.2 Variable Costing Total Revenues (-) Product Cost Direct Materials Direct Labor Variable Overhead Variable Selling & Admin (=) Total Var Cost Contribution Margin (-) Persiod Cost Fixed Manufacturing Overhead Fixed General and administrative Per Unit $20 $60 $20.00 $6.00 $3.00 $580,000.00 $(579,980.00) CM/Unit Percent $150,000.00 $110,000.00 (=) Total Fixed Cost (=) Net Income Units Produced Units Sold $29.00 $31.00 51.67% $(579,980) $(839,980) 0.69 Company Name Direct Materials $20.00 Direct Labor $6.00 Variable Manufacturing Overhead $3.00 Fixed Manufacturing Overhead $150,000.00 Variable Selling & Admin $6.00 Fixed General and administrative $110,000.00 U nits Produced 25,000 Units in beginnning finished goods U nits Sold 20,000 S elling Price $60.00 Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio 260,000.00 $31.00 8,387.10 Degree of Leverage Contribution Margin (divided) Net Operating Income (=) Degree Of Operating Leverage For Break Even the Value is Always ZERO $- Target Profit $260,000 $(839,980) 25,000 p er month 20,000 Contribution Margin Ratio Per Unit Fixed cost (diveded by) Contribution Margin per unit Breakeven Point Contribution Margin Ratio Fixed cost (diveded by)+ Desired Profit Contribution Margin per Unit Perccent Breakeven Point (Units to Make) Margin of Safety Formula S ales $1,200,000.00 Breakeven Sales $Margin of Safety in Dollars $1,200,000.00 Margin of Safety Percentage 0% Per Unit $2.98 0.5167 - per unit per unit per unit per month per unit per month per month per unit Mod 3.2 Variable Costing Total $1,265,000 Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Manufacturing Overhead Variable Selling & Admin (=) Total Var Cost Contribution Margin (-) Fixed Cost Fixed Overhead Fixed General and administrative Per Unit $55 $22.00 $5.00 $2.00 $4.00 $759,000.00 $506,000.00 CM/Unit Percent $160,000.00 $100,000.00 (=) Total Fixed Cost (=) Net Income U nits Produced Units Sold $33.00 $22.00 40.00% $506,000 $246,000 2.06 $29.00 For Break Even the Value is Always ZERO $- Target Profit $260,000 $246,000 24,000 p er month 23,000 260,000.00 $22.00 11,818.18 Degree of Leverage Contribution Margin (divided) Net Operating Income (=) Degree Of Operating Leverage V ariable Costing No Var. Selling Company Name Direct Materials $22.00 Direct Labor $5.00 Variable Manufacturing Overhead $2.00 Fixed Manufacturing Overhead $160,000.00 Variable Selling & Admin $4.00 Fixed General and administrative $100,000.00 U nits Produced 24,000 Units in beginnning finished goods U nits Sold 23,000 S elling Price $55.00 Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio Contribution Margin Ratio Per Unit Fixed cost (diveded by) Contribution Margin per unit Breakeven Point Contribution Margin Ratio Fixed cost (diveded by)+ Desired Profit Contribution Margin per Unit Perccent Breakeven Point (Units to Make) Margin of Safety Formula S ales $1,265,000.00 Breakeven Sales $Margin of Safety in Dollars $1,265,000.00 Margin of Safety Percentage 0% Per Unit $2.03 0.4000 - per unit per unit per unit per month per unit per month per month per unit Mod 3.2 - C1 Absorbortion Costing Total $1,595,000 Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Manufacturing Overhead Variable Selling & Admin (=) Total Var Cost Contribution Margin (-) Fixed Cost Fixed Overhead Fixed General and administrative Per Unit $55 $24.00 $4.00 $2.00 $4.00 $986,000.00 $609,000.00 CM/Unit Percent $192,000.00 $120,000.00 (=) Total Fixed Cost (=) Net Income U nits Produced Units Sold $34.00 $21.00 38.18% Degree of Leverage Contribution Margin (divided) Net Operating Income (=) Degree Of Operating Leverage V ariable Costing No Var. Selling $609,000 $297,000 2.05 $30.00 For Break Even the Value is Always ZERO $- Target Profit $312,000 $297,000 32,000 p er month 29,000 Company Name Direct Materials $24.00 Direct Labor $4.00 Variable Manufacturing Overhead $2.00 Fixed Manufacturing Overhead $192,000.00 Variable Selling & Admin $4.00 Fixed General and administrative $120,000.00 U nits Produced 32,000 U nits in beginnning finished goods Units Sold 29,000 Selling Price $55.00 Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio Contribution Margin Ratio Per Unit Fixed cost (diveded by) 312,000.00 Contribution Margin per unit $21.00 Breakeven Point 14,857.14 Per Unit $2.15 A bsortion Cost - Per Unit Fixed Manufacturing Overhead U nits Produced A bsortion Cost - Per Unit Margin of Safety Formula S ales $1,595,000.00 Breakeven Sales #NAME? Margin of Safety in Dollars #NAME? Margin of Safety Percentage #NAME? per unit per unit per unit per month per unit per month per month per unit $192,000.00 32,000 $6.00 Direct Materials Direct Labor Variable Manufacturing Overhead (+) Total Variable Cost (+) Absorbtion Cost (=) Unit Product Cost $24.00 $4.00 $2.00 $30.00 $6.00 $36.00 Mod 3.2 - C1 Absorbortion Costing Example Total $1,000,000 Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Manufacturing Overhead Variable Selling & Admin (=) Total Var Cost Contribution Margin (-) Fixed Cost Fixed Manufacturing Overhead Fixed General and administrative Per Unit $50 $20.00 $6.00 $3.00 $5.00 $680,000.00 $320,000.00 CM/Unit Percent $150,000.00 $110,000.00 (=) Total Fixed Cost (=) Net Income U nits Produced Units Sold $34.00 $16.00 32.00% Degree of Leverage Contribution Margin (divided) Net Operating Income (=) Degree Of Operating Leverage V ariable Costing No Var. Selling $320,000 $60,000 5.33 $29.00 For Break Even the Value is Always ZERO $- Target Profit $260,000 $60,000 25,000 p er month 20,000 Company Name Direct Materials $20.00 Direct Labor $6.00 Variable Manufacturing Overhead $3.00 Fixed Manufacturing Overhead $150,000.00 Variable Selling & Admin $5.00 Fixed General and administrative $110,000.00 U nits Produced 25,000 U nits in beginnning finished goods Units Sold 20,000 S elling Price $50.00 Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio Contribution Margin Ratio Per Unit Fixed cost (diveded by) 260,000.00 Contribution Margin per unit $16.00 Breakeven Point 16,250.00 Per Unit $1.54 Absortion Cost - Per Unit Fixed Manufacturing Overhead U nits Produced A bsortion Cost - Per Unit Margin of Safety Formula S ales $1,000,000.00 Breakeven Sales #NAME? Margin of Safety in Dollars #NAME? Margin of Safety Percentage #NAME? per unit per unit per unit per month per unit per month per month per unit $150,000.00 25,000 $6.00 Direct Materials Direct Labor Variable Manufacturing Overhead (+) Total Variable Cost (+) Absorbtion Cost (=) Unit Product Cost $20.00 $6.00 $3.00 $29.00 $6.00 $35.00 Mod 3.2 - C2 Absorbortion Costing Total $1,595,000 Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Manufacturing Overhead Variable Selling & Admin (=) Total Var Cost Contribution Margin (-) Fixed Cost Fixed Manufacturing Overhead Fixed General and administrative Per Unit $55 $26.00 $8.00 $5.00 $3.00 $1,218,000.00 $377,000.00 CM/Unit Percent $192,000.00 $100,000.00 (=) Total Fixed Cost (=) Net Income U nits Produced Units Sold $42.00 $13.00 23.64% $377,000 $85,000 4.44 $39.00 For Break Even the Value is Always ZERO $- Target Profit Company Name Direct Materials $26.00 Direct Labor $8.00 Variable Manufacturing Overhead $5.00 Fixed Manufacturing Overhead $192,000.00 Variable Selling & Admin $3.00 Fixed Selling and Administrative $100,000.00 U nits Produced 32,000 U nits in beginnning finished goods Units Sold 29,000 S elling Price $55.00 Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio Contribution Margin Ratio Per Unit Fixed cost (diveded by) 292,000.00 Contribution Margin per unit $13.00 Breakeven Point 22,461.54 Per Unit $1.42 $192,000.00 32,000 $6.00 Direct Materials Direct Labor Variable Manufacturing Overhead (+) Total Variable Cost (+) Absorbtion Cost (=) Unit Product Cost Degree of Leverage Contribution Margin (divided) Net Operating Income (=) Degree Of Operating Leverage V ariable Costing No Var. Selling $292,000 $85,000 32,000 p er month 29,000 Absortion Cost - Per Unit Fixed Manufacturing Overhead Units Produced A bsortion Cost - Per Unit Margin of Safety Formula S ales $1,595,000.00 Breakeven Sales #NAME? Margin of Safety in Dollars #NAME? Margin of Safety Percentage #NAME? per unit per unit per unit per month per unit per month per month per unit Finding Net Operating Income Sales Less Variable Expenses Beginning Inventory $COGM $1,440,000.00 Goods Avail For Sale $1,440,000.00 Less Ending Inventory $135,000.00 Gross Margin Selling and Admin Expenses N et Operating Income $26.00 $8.00 $5.00 $39.00 $6.00 $45.00 $1,595,000.00 $1,305,000.00 $290,000.00 $187,000.00 $103,000.00 Mod 3.2 - C2 Absorbortion Costing Example Total $1,000,000 Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Manufacturing Overhead Variable Selling & Admin (=) Total Var Cost Contribution Margin (-) Fixed Cost Fixed Manufacturing Overhead Fixed General and administrative Per Unit $50 $20.00 $6.00 $3.00 $5.00 $680,000.00 $320,000.00 CM/Unit Percent $150,000.00 $110,000.00 (=) Total Fixed Cost (=) Net Income U nits Produced Units Sold $34.00 $16.00 32.00% $320,000 $60,000 5.33 $29.00 For Break Even the Value is Always ZERO $- Target Profit $260,000 $60,000 25,000 p er month 20,000 Company Name Direct Materials $20.00 Direct Labor $6.00 Variable Manufacturing Overhead $3.00 Fixed Manufacturing Overhead $150,000.00 Variable Selling & Admin $5.00 Fixed Selling and Administrative $110,000.00 U nits Produced 25,000 U nits in beginnning finished goods Units Sold 20,000 S elling Price $50.00 Contribution Margin Ratio Per Unit Fixed cost (diveded by) 260,000.00 Contribution Margin per unit $16.00 Breakeven Point 16,250.00 Per Unit $1.54 Direct Materials Direct Labor Variable Manufacturing Overhead (+) Total Variable Cost (+) Absorbtion Cost (=) Unit Product Cost Degree of Leverage Contribution Margin (divided) Net Operating Income (=) Degree Of Operating Leverage V ariable Costing No Var. Selling Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio Absortion Cost - Per Unit Fixed Manufacturing Overhead Units Produced A bsortion Cost - Per Unit Margin of Safety Formula S ales $1,000,000.00 Breakeven Sales #NAME? Margin of Safety in Dollars #NAME? Margin of Safety Percentage #NAME? $150,000.00 25,000 $6.00 per unit per unit per unit per month per unit per month per month per unit Finding Net Operating Income Sales Less Variable Expenses Beginning Inventory $COGM $875,000.00 Goods Avail For Sale $875,000.00 Less Ending Inventory $175,000.00 Gross Margin Selling and Admin Expenses N et Operating Income $20.00 $6.00 $3.00 $29.00 $6.00 $35.00 $1,000,000.00 $700,000.00 $300,000.00 $210,000.00 $90,000.00 Mod 3.2 - D1 Reconcile between the Variable and Absorbortion Costing Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Manufacturing Overhead Variable Selling & Admin Total $2,000,000 Final Q3 Per Unit $40 $10.00 $6.00 $3.00 $4.00 (=) Total Var Cost $1,150,000.00 Contribution Margin $850,000.00 Variable Costing w/o Var. Selling & Admin) (-) Fixed Cost CM/Unit Percent Fixed Manufacturing Overhead $240,000.00 Fixed Selling and Administrative $350,000.00 (=) Total Fixed Cost (=) Net Income $23.00 $17.00 $19.00 42.50% $590,000 $260,000 Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio Company Name Direct Materials $10.00 Direct Labor $6.00 Variable Manufacturing Overhead $3.00 Fixed Manufacturing Overhead $240,000.00 Variable Selling & Admin $4.00 Fixed Selling and Administrative $350,000.00 U nits Produced 60,000 Units in beginnning finished goods U nits Sold 50,000 S elling Price $40.00 $2,000,000.00 $1,150,000.00 $850,000.00 $550,000.00 $300,000.00 $240,000.00 60,000 $4.00 $2,000,000.00 $1,150,000.00 $850,000.00 $240,000.00 $350,000.00 $260,000.00 Direct Materials Direct Labor Variable Manufacturing Overhead (+) Total Variable Cost (+) Absorbtion Cost (=) Unit Product Cost Changes of the two Systems Variable Net Oper. Income Absorbtion Net Oper. Income Difference $10.00 $6.00 $3.00 $19.00 $4.00 $23.00 23 $260,000.00 $300,000.00 $(40,000.00) Mod 3.2 - D1 Reconcile between the Variable and Absorbortion Costing Example Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Manufacturing Overhead Variable Selling & Admin Total $1,520,000 $38 $10.00 $5.00 $3.00 $4.00 (=) Total Var Cost $880,000.00 Contribution Margin $640,000.00 Variable Costing w/o Var. Selling & Admin) (-) Fixed Cost CM/Unit Percent Fixed Manufacturing Overhead $200,000.00 Fixed Selling and Administrative $300,000.00 (=) Total Fixed Cost (=) Net Income Per Unit $22.00 $16.00 $18.00 42.11% $500,000 $140,000 Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio $1,520,000.00 $880,000.00 $640,000.00 $200,000.00 $300,000.00 $140,000.00 per unit per unit per unit per month per unit per month per month per unit Finding Net Operating Income (Absorbtion Style) Sales Less Variable Expenses Beginning Inventory $COGM $1,100,000.00 Goods Avail For Sale $1,100,000.00 Less Ending Inventory $220,000.00 Gross Margin Selling and Admin Expenses Net Operating Income Absortion Cost - Per Unit Fixed Manufacturing Overhead U nits Produced A bsortion Cost - Per Unit Contribution Margin Ratio Per Unit Fixed cost (diveded by) 500,000.00 Contribution Margin per Unit $16.00 Breakeven Point 31,250.00 Cost Per Unit $1.60 Finding Net Operating Income Variable Style) Sales Less Variable Expenses Beginning Inventory $V ar. COGS $720,000.00 V ar. Selling & Admin $160,000.00 Contribution Margin Less Ending Inventory Fixed Manufacturing Overhead Fixed Selling and administrative Net Operating Income Company Name Direct Materials $10.00 Direct Labor $5.00 Variable Manufacturing Overhead $3.00 Fixed Manufacturing Overhead $200,000.00 Variable Selling & Admin $4.00 Fixed Selling and Administrative $300,000.00 U nits Produced 50,000 Units in beginnning finished goods U nits Sold 4 0,000 S elling Price $38.00 U nit Product Cost Direct Materials Direct Labor Variable Manufacturing Overhead (+) Total Variable Cost (+) Absorbtion Cost (=) Unit Product Cost Changes of the two Systems Variable Net Oper. Income Absorbtion Net Oper. Income Difference $200,000.00 50,000 $4.00 $10.00 $5.00 $3.00 $18.00 $4.00 $22.00 $140,000.00 $180,000.00 $(40,000.00) (=) Total Var Cost Contribution Margin V ariable Costing w/o Var. Selling & Admin) (-) Fixed Cost Fixed Manufacturing Overhead Fixed Selling and Administrative $1,520,000.00 $880,000.00 $640,000.00 $460,000.00 $180,000.00 Per Unit $40 $$$12.00 $- $48,000.00 $112,000.00 CM/Unit Percent $5,102.00 $3,008.00 (=) Total Fixed Cost (=) Net Income $12.00 $28.00 $12.00 70.00% $8,110 $103,890 Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio Contribution Margin Ratio Per Unit Fixed cost (diveded by) Contribution Margin per Unit Breakeven Point Cost Per Unit U nit Product Cost Finding Net Operating Income Variable Style) Sales Less Variable Expenses Beginning Inventory $V ar. COGS $950,000.00 Var. Selling & Admin $200,000.00 Contribution Margin Less Ending Inventory Fixed Manufacturing Overhead Fixed Selling and administrative Net Operating Income Total $160,000 Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Manufacturing Overhead Variable Selling & Admin per unit Finding Net Operating Income (Absorbtion Style) Sales Less Variable Expenses Beginning Inventory $COGM $1,380,000.00 Goods Avail For Sale $1,380,000.00 Less Ending Inventory $230,000.00 Gross Margin Selling and Admin Expenses Net Operating Income Absortion Cost - Per Unit Fixed Manufacturing Overhead U nits Produced A bsortion Cost - Per Unit Contribution Margin Ratio Per Unit Fixed cost (diveded by) 590,000.00 Contribution Margin per Unit $17.00 Breakeven Point 34,705.88 Cost Per Unit $1.73 per unit per unit per unit per month per unit per month per month per unit per unit $12.00 per unit per month per unit per month 3,950 per month 1,000.00 4 ,000 $40.00 per unit Finding Net Operating Income (Absorbtion Style) Sales $160,000.00 Less Variable Expenses Beginning Inventory $1,000.00 COGM $47,400.00 Goods Avail For Sale $48,400.00 Less Ending Inventory $(600.00) $49,000.00 Gross Margin $111,000.00 Selling and Admin Expenses $Net Operating Income $111,000.00 Absortion Cost - Per Unit Fixed Manufacturing Overhead U nits Produced A bsortion Cost - Per Unit 8,110.00 $28.00 289.64 $13.64 Finding Net Operating Income Variable Style) Sales Less Variable Expenses Beginning Inventory $1,000.00 Var. COGS $48,000.00 V ar. Selling & Admin $Contribution Margin Less Ending Inventory Fixed Manufacturing Overhead Fixed Selling and administrative N et Operating Income Company Name Direct Materials Direct Labor Variable Manufacturing Overhead Fixed Manufacturing Overhead Variable Selling & Admin Fixed Selling and Administrative U nits Produced U nits in beginnning finished goods U nits Sold S elling Price $3,950 $- U nit Product Cost $160,000.00 $48,000.00 $112,000.00 $5,102.00 $3,008.00 $103,890.00 Direct Materials Direct Labor Variable Manufacturing Overhead (+) Total Variable Cost (+) Absorbtion Cost (=) Unit Product Cost Changes of the two Systems Variable Net Oper. Income Absorbtion Net Oper. Income Difference $$$12.00 $12.00 $$12.00 $103,890.00 $111,000.00 $(7,110.00) 23 Mod 3.2 - D1 Reconcile between the Variable and Absorbortion Costing Total Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Manufacturing Overhead Variable Selling & Admin (=) Total Var Cost Contribution Margin Variable Costing w/o Var. Selling & Admin) (-) Fixed Cost Fixed Manufacturing Overhead Fixed Selling and Administrative Per Unit $2,000,000 $40 $ 10.00 $ 6.00 $ 3.00 $ 4.00 $1,150,000.00 $850,000.00 $23.00 $17.00 $19.00 42.50% CM/Unit Percent $240,000.00 $350,000.00 (=) Total Fixed Cost (=) Net Income $590,000 $260,000 Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio Contribution Margin Ratio Per Unit Fixed cost (diveded by) Contribution Margin per Unit Breakeven Point Cost Per Unit $1.73 Total $1,000,000 Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Manufacturing Overhead Variable Selling & Admin (=) Total Var Cost Contribution Margin Variable Costing w/o Var. Selling & Admin) (-) Fixed Cost Fixed Manufacturing Overhead Fixed Selling and Administrative $ 2,000,000.00 $ 1,150,000.00 $ 850,000.00 $ 240,000.00 $ 350,000.00 $260,000.00 Per Unit $50 $ 22.00 $ 5.00 $ 4.00 $ 6.00 $740,000.00 $260,000.00 $37.00 $13.00 $31.00 26.00% CM/Unit Percent $200,000.00 $100,000.00 (=) Total Fixed Cost (=) Net Income $300,000 $(40,000) Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio Contribution Margin Ratio Per Unit Fixed cost (diveded by) Contribution Margin per Unit Breakeven Point Cost Per Unit Finding Net Operating Income Variable Style) Sales Less Variable Expenses Beginning Inventory $Var. COGS $ 620,000.00 Var. Selling & Admin $ 120,000.00 Contribution Margin Less Ending Inventory Fixed Manufacturing Overhead Fixed Selling and administrative Net Operating Income Mod 3.2 - Test 1.2 Total $1,200,000 Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Manufacturing Overhead Variable Selling & Admin (=) Total Var Cost Contribution Margin Variable Costing w/o Var. Selling & Admin) (-) Fixed Cost Fixed Manufacturing Overhead Fixed Selling and Administrative $ 1,000,000.00 $ 740,000.00 $ 260,000.00 $ 200,000.00 $ 100,000.00 $(40,000.00) Per Unit $60 $ 24.00 $ 5.00 $ 5.00 $ 6.00 $800,000.00 $400,000.00 $40.00 $20.00 $34.00 33.33% CM/Unit Percent $200,000.00 $150,000.00 (=) Total Fixed Cost (=) Net Income $350,000 $50,000 Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio Contribution Margin Ratio Per Unit Fixed cost (diveded by) Contribution Margin per Unit Breakeven Point Cost Per Unit $1.43 Total $1,200,000 Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Manufacturing Overhead Variable Selling & Admin (=) Total Var Cost Contribution Margin Variable Costing w/o Var. Selling & Admin) (-) Fixed Cost Fixed Manufacturing Overhead Fixed Selling and Administrative $ 1,200,000.00 $ 800,000.00 $ 400,000.00 $ 200,000.00 $ 150,000.00 $50,000.00 Per Unit $60 $ 20.00 $ 4.00 $ 5.00 $ 5.00 $680,000.00 $520,000.00 $34.00 $26.00 $29.00 43.33% CM/Unit Percent $150,000.00 $100,000.00 (=) Total Fixed Cost (=) Net Income $250,000 $270,000 Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio Contribution Margin Ratio Per Unit Fixed cost (diveded by) Contribution Margin per Unit Breakeven Point Cost Per Unit $2.60 Total $1,200,000 Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Manufacturing Overhead Variable Selling & Admin (=) Total Var Cost Contribution Margin Variable Costing w/o Var. Selling & Admin) (-) Fixed Cost Fixed Manufacturing Overhead Fixed Selling and Administrative $ 1,200,000.00 $ 680,000.00 $ 520,000.00 $ 150,000.00 $ 100,000.00 $270,000.00 Per Unit $60 $ 18.00 $ 5.00 $ 4.00 $ 6.00 $660,000.00 $540,000.00 $33.00 $27.00 $27.00 45.00% CM/Unit Percent $175,000.00 $100,000.00 (=) Total Fixed Cost (=) Net Income $275,000 $265,000 Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio Contribution Margin Ratio Per Unit Fixed cost (diveded by) Contribution Margin per Unit Breakeven Point Cost Per Unit $2.45 Finding Net Operating Income Variable Style) Sales Less Variable Expenses Beginning Inventory $Var. COGS $ 540,000.00 Var. Selling & Admin $ 120,000.00 Contribution Margin Less Ending Inventory Fixed Manufacturing Overhead Fixed Selling and administrative Net Operating Income Mod 3.2 - Test 1.5 Total $1,600,000 Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Manufacturing Overhead Variable Selling & Admin (=) Total Var Cost Contribution Margin Variable Costing w/o Var. Selling & Admin) (-) Fixed Cost Fixed Manufacturing Overhead Fixed Selling and Administrative $ 1,200,000.00 $ 660,000.00 $ 540,000.00 $ 175,000.00 $ 100,000.00 $265,000.00 Per Unit $40 $ 14.00 $ 3.00 $ 5.00 $- $880,000.00 $720,000.00 $22.00 $18.00 $22.00 45.00% CM/Unit Percent $250,000.00 $460,000.00 (=) Total Fixed Cost (=) Net Income $710,000 $10,000 Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio Contribution Margin Ratio Per Unit Fixed cost (diveded by) Contribution Margin per Unit Breakeven Point Cost Per Unit Changes of the two Systems Variable Net Oper. Income A bsorbtion Net Oper. Income Difference $1.27 $ 1,600,000.00 $ 880,000.00 $ 720,000.00 $ 250,000.00 $ 460,000.00 $10,000.00 per unit per unit per unit per month per unit per month per month per unit Changes of the two Systems Variable Net Oper. Income A bsorbtion Net Oper. Income Difference $ (40,000.00) $ 144,000.00 $(184,000.00) per unit per unit per unit per month per unit per month per month per unit $ 50,000.00 $ 90,000.00 $(40,000.00) per unit per unit per unit per month per unit per month per month per unit $ 270,000.00 $ 300,000.00 $(30,000.00) per unit per unit per unit per month per unit per month per month per unit $ 1,200,000.00 $ 680,000.00 $ 520,000.00 $ 220,000.00 $300,000.00 $175,000.00 25,000 $7.00 $ 18.00 $ 5.00 $ 4.00 $27.00 $ 7.00 $34.00 $ 265,000.00 $ 300,000.00 $(35,000.00) per unit per unit per unit per month per unit per month per month per unit Finding Net Operating Income (Absorbtion Style) Sales Less Variable Expenses Beginning Inventory $COGM $ 1,350,000.00 G oods Avail For Sale $ 1,350,000.00 Less Ending Inventory $ 270,000.00 G ross Margin Selling and Admin Expenses Net Operating Income Changes of the two Systems Variable Net Oper. Income A bsorbtion Net Oper. Income Difference $ 700,000.00 $ 500,000.00 $ 200,000.00 $300,000.00 $ 20.00 $ 4.00 $ 5.00 $29.00 $ 6.00 $35.00 Company Name Direct Materials $ 14.00 Direct Labor $ 3.00 Variable Manufacturing Overhead $ 5.00 Fixed Manufacturing Overhead $ 250,000.00 Variable Selling & Admin Fixed Selling and Administrative $ 460,000.00 Units Produced 50,000 Units in beginnning finished goods Units Sold 4 0,000 Selling Price $ 40.00 Unit Product Cost Direct Materials Direct Labor Variable Manufacturing Overhead (+) Total Variable Cost (+) Absorbtion Cost (=) Unit Product Cost $ 1,200,000.00 $150,000.00 25,000 $6.00 Finding Net Operating Income (Absorbtion Style) Sales Less Variable Expenses Beginning Inventory $COGM $ 850,000.00 G oods Avail For Sale $ 850,000.00 Less Ending Inventory $ 170,000.00 G ross Margin Selling and Admin Expenses Net Operating Income Changes of the two Systems Variable Net Oper. Income A bsorbtion Net Oper. Income Difference $ 840,000.00 $ 360,000.00 $ 270,000.00 $90,000.00 $ 24.00 $ 5.00 $ 5.00 $34.00 $ 8.00 $42.00 Company Name Direct Materials $ 18.00 Direct Labor $ 5.00 Variable Manufacturing Overhead $ 4.00 Fixed Manufacturing Overhead $ 175,000.00 Variable Selling & Admin $ 6.00 Fixed Selling and Administrative $ 100,000.00 Units Produced 25,000 Units in beginnning finished goods Units Sold 20,000 Selling Price $ 60.00 Unit Product Cost Direct Materials Direct Labor Variable Manufacturing Overhead (+) Total Variable Cost (+) Absorbtion Cost (=) Unit Product Cost $ 1,200,000.00 $200,000.00 25,000 $8.00 Finding Net Operating Income (Absorbtion Style) Sales Less Variable Expenses Beginning Inventory $COGM $ 875,000.00 G oods Avail For Sale $ 875,000.00 Less Ending Inventory $ 175,000.00 G ross Margin Selling and Admin Expenses Net Operating Income Changes of the two Systems Variable Net Oper. Income A bsorbtion Net Oper. Income Difference $ 636,000.00 $ 364,000.00 $ 220,000.00 $144,000.00 $ 22.00 $ 5.00 $ 4.00 $31.00 $ 0.80 $31.80 Company Name Direct Materials $ 20.00 Direct Labor $ 4.00 Variable Manufacturing Overhead $ 5.00 Fixed Manufacturing Overhead $ 150,000.00 Variable Selling & Admin $ 5.00 Fixed Selling and Administrative $ 100,000.00 Units Produced 25,000 Units in beginnning finished goods Units Sold 20,000 Selling Price $ 60.00 Unit Product Cost Direct Materials Direct Labor Variable Manufacturing Overhead (+) Total Variable Cost (+) Absorbtion Cost (=) Unit Product Cost $ 1,000,000.00 $200,000.00 250,000 $0.80 Finding Net Operating Income (Absorbtion Style) Sales Less Variable Expenses Beginning Inventory $COGM $ 1,050,000.00 G oods Avail For Sale $ 1,050,000.00 Less Ending Inventory $ 210,000.00 G ross Margin Selling and Admin Expenses Net Operating Income Unit Product Cost Direct Materials Direct Labor Variable Manufacturing Overhead (+) Total Variable Cost (+) Absorbtion Cost (=) Unit Product Cost $ 1,150,000.00 $ 850,000.00 $ 550,000.00 $300,000.00 $ 260,000.00 $ 300,000.00 $(40,000.00) Company Name Direct Materials $ 24.00 Direct Labor $ 5.00 Variable Manufacturing Overhead $ 5.00 Fixed Manufacturing Overhead $ 200,000.00 Variable Selling & Admin $ 6.00 Fixed Selling and Administrative $ 150,000.00 Units Produced 25,000 Units in beginnning finished goods Units Sold 20,000 Selling Price $ 60.00 Absortion Cost - Per Unit Fixed Manufacturing Overhead Units Produced Absortion Cost - Per Unit 710,000.00 $18.00 39,444.44 Finding Net Operating Income Variable Style) Sales Less Variable Expenses Beginning Inventory $Var. COGS $ 880,000.00 Var. Selling & Admin $Contribution Margin Less Ending Inventory Fixed Manufacturing Overhead Fixed Selling and administrative Net Operating Income Unit Product Cost Direct Materials Direct Labor Variable Manufacturing Overhead (+) Total Variable Cost (+) Absorbtion Cost (=) Unit Product Cost $ 2,000,000.00 $ 10.00 $ 6.00 $ 3.00 $19.00 $ 4.00 $23.00 Finding Net Operating Income (Absorbtion Style) Sales Less Variable Expenses Beginning Inventory $COGM $ 7,950,000.00 G oods Avail For Sale $ 7,950,000.00 Less Ending Inventory $ 7,314,000.00 Gross Margin Selling and Admin Expenses Net Operating Income Absortion Cost - Per Unit Fixed Manufacturing Overhead Units Produced Absortion Cost - Per Unit 275,000.00 $27.00 10,185.19 per unit $240,000.00 60,000 $4.00 Company Name Direct Materials $ 22.00 Direct Labor $ 5.00 Variable Manufacturing Overhead $ 4.00 Fixed Manufacturing Overhead $ 200,000.00 Variable Selling & Admin $ 6.00 Fixed Selling and Administrative $ 100,000.00 Units Produced 250,000 Units in beginnning finished goods Units Sold 20,000 Selling Price $ 50.00 Absortion Cost - Per Unit Fixed Manufacturing Overhead Units Produced Absortion Cost - Per Unit 250,000.00 $26.00 9,615.38 Finding Net Operating Income Variable Style) Sales Less Variable Expenses Beginning Inventory $Var. COGS $ 580,000.00 Var. Selling & Admin $ 100,000.00 Contribution Margin Less Ending Inventory Fixed Manufacturing Overhead Fixed Selling and administrative Net Operating Income Mod 3.2 - Test 1.4 Changes of the two Systems Variable Net Oper. Income A bsorbtion Net Oper. Income Difference Absortion Cost - Per Unit Fixed Manufacturing Overhead Units Produced Absortion Cost - Per Unit 350,000.00 $20.00 17,500.00 Finding Net Operating Income Variable Style) Sales Less Variable Expenses Beginning Inventory $Var. COGS $ 680,000.00 Var. Selling & Admin $ 120,000.00 Contribution Margin Less Ending Inventory Fixed Manufacturing Overhead Fixed Selling and administrative Net Operating Income Mod 3.2 - Test 1.3 Unit Product Cost Direct Materials Direct Labor Variable Manufacturing Overhead (+) Total Variable Cost (+) Absorbtion Cost (=) Unit Product Cost Absortion Cost - Per Unit Fixed Manufacturing Overhead Units Produced Absortion Cost - Per Unit 300,000.00 $13.00 23,076.92 $10.83 per unit per unit per unit per month per unit per month per month Finding Net Operating Income (Absorbtion Style) Sales Less Variable Expenses Beginning Inventory $COGM $ 1,380,000.00 G oods Avail For Sale $ 1,380,000.00 Less Ending Inventory $ 230,000.00 G ross Margin Selling and Admin Expenses Net Operating Income Absortion Cost - Per Unit Fixed Manufacturing Overhead Units Produced Absortion Cost - Per Unit 590,000.00 $17.00 34,705.88 Finding Net Operating Income Variable Style) Sales Less Variable Expenses Beginning Inventory $Var. COGS $ 950,000.00 Var. Selling & Admin $ 200,000.00 Contribution Margin Less Ending Inventory Fixed Manufacturing Overhead Fixed Selling and administrative Net Operating Income Mod 3.2 - Test 1.1 Company Name Direct Materials $ 10.00 Direct Labor $ 6.00 Variable Manufacturing Overhead $ 3.00 Fixed Manufacturing Overhead $ 240,000.00 Variable Selling & Admin $ 4.00 Fixed Selling and Administrative $ 350,000.00 Units Produced 60,000 Units in beginnning finished goods Units Sold 50,000 Selling Price $ 40.00 $ 1,600,000.00 $ 1,080,000.00 $ 520,000.00 $ 460,000.00 $60,000.00 $250,000.00 50,000 $5.00 $ 14.00 $ 3.00 $ 5.00 $22.00 $ 5.00 $27.00 $ 10,000.00 $ 60,000.00 $(50,000.00) Mod 3.2 - Test 1.1 Total Per Unit Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Manufacturing Overhead Variable Selling & Admin (=) Total Var Cost Contribution Margin Variable Costing w/o Var. Selling & Admin) (-) Fixed Cost Fixed Manufacturing Overhead Fixed Selling and Administrative $- $$$$ 5.00 $ 3.00 $624,000.00 $(624,000.00) CM/Unit Percent $32,000.00 $16,000.00 (=) Total Fixed Cost (=) Net Income $8.00 $(8.00) $5.00 #DIV/0! $48,000 $(672,000) Total FC+Target Profit (DIVIDED By) Contribution Margin Ratio Contribution Margin Ratio Per Unit Fixed cost (diveded by) Contribution Margin per Unit Breakeven Point Cost Per Unit $(1.33) $- $ 624,000.00 $ (624,000.00) $ 32,000.00 $ 16,000.00 $(672,000.00) per unit per unit per unit per month per unit per month per month per unit Finding Net Operating Income (Absorbtion Style) Sales Less Variable Expenses Beginning Inventory $COGM $ 72,000.00 G oods Avail For Sale $ 72,000.00 Less Ending Inventory $ (630,000.00) Gross Margin Selling and Admin Expenses Net Operating Income Absortion Cost - Per Unit Fixed Manufacturing Overhead Units Produced Absortion Cost - Per Unit 4 8,000.00 $(8.00) (6,000.00) Finding Net Operating Income Variable Style) Sales Less Variable Expenses Beginning Inventory $Var. COGS $ 390,000.00 Var. Selling & Admin $ 234,000.00 Contribution Margin Less Ending Inventory Fixed Manufacturing Overhead Fixed Selling and administrative Net Operating Income Company Name Direct Materials Direct Labor Variable Manufacturing Overhead $ 5.00 Fixed Manufacturing Overhead $ 32,000.00 Variable Selling & Admin $ 3.00 Fixed Selling and Administrative $ 16,000.00 Units Produced 8,000 Units in beginnning finished goods Units Sold 78,000 Selling Price Unit Product Cost Direct Materials Direct Labor Variable Manufacturing Overhead (+) Total Variable Cost (+) Absorbtion Cost (=) Unit Product Cost Changes of the two Systems Variable Net Oper. Income A bsorbtion Net Oper. Income Difference $32,000.00 8,000 $4.00 $$$ 5.00 $5.00 $ 4.00 $9.00 $ (672,000.00) $ (952,000.00) $280,000.00 $- $ 702,000.00 $ (702,000.00) $ 250,000.00 $(952,000.00) 4 .1 A1 - Direct and Indirect Cost Insurance on the Assembly Facility Cost of hard drives installed in Computers Cost of advertising Wages of Employees who assemble Salary of Shop Supervisor Depreciation on Testing and Assembly Equipment Wages of Accountant Indirect Manufacturing Cost $3,000 $50,000 $5,000 $100,000 $60,000 $4,000 $55,000 $67,000 Type of Cost Indirect Direct Material NA - S&A Direct Labor Indirect Indirect NA - S&A Indiret 4.1 B1 - Traditional Absorbtion Costing - Single Cost Driver Company Name Hats Company Name Shirts Direct Materials Direct Labor Units Produced Assume Est OH cost Est Direct Labor Banners $5,000 $1,000 1,000 $3,000 $3,000 Banners Banners $5,000 $1,000 $3,000 Units Produced 1,000 1,000 1,000 Total Budgeted Overhead Budgeted Cost Labor Hrs (Divide) $5,000 $1,000 1,000 Shirts Direct Materials Direct Labor Units Produced Assume Est OH cost Est Direct Labor $5,000 $1,000 1,000 Banners $5,000 $1,000 1,000 $60,000 $100,000 Banners Direct Materials Direct Labor Overhead Application Rate Hats $5,000 $1,000 1,000 $3,000 $3,000 Cost Banners $5.00 $1.00 $1.00 $7.00 Direct Materials Direct Labor Overhead $60,000 $100,000 $- Units Produced 2,000 2,000 Total Total Rate $1.00 Application Rate (Divide) Budgeted Overhead Budgeted Cost Labor Hrs $$- Cost $30.00 $50.00 $0.50 $80.50 Total Rate $0.50 4 .1 C1 - Production- Cost Cross Subsidization ProPats Hats $5,000 $1,000 Direct Materials Direct Labor Overhead Cost (Est $3000) Direct Labor Rate (Est $3000) Invrease of $500 Overhead Shirts $5,000 $1,000 Banners $5,000 $1,000 3000 3000 Application Rate (Divide) Applied Overhead = Sail Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) 1.00 $3,000 $3,000 Hats $1,000 Direct Labor Applied Overhead Rate Direct Materials Direct Labor Total Units Unit Cost Shirts $1,000 $5,000 $5,000 $1,000 $11,000 1000 $11.00 Starting $3,000.00 $3,000.00 (Divide) Est. Budgeted Overhead Budgeted Cost Labor Hrs Applied Overhead = Application Rate (x) 1.40 Applied Overhead Direct Materials Direct Labor Total Units Unit Cost $5,000 $500.00 ($500.00) $3,500 $2,500 New Est $3,500.00 $2,500.00 Total Rate $1.40 Actual Direct Labor $1,000 The Company Hats $1,400 $5,000 $1,000 $7,400 1000 $7.40 Est Overhead $15,000 $5,000 $1,000 $11,000 1000 $11.00 Inc/Dec Estimated Overhead Cost Estimated Direct Labor Cost Total $5,000.00 Banners $1,000 $5,000 $5,000 $1,000 $11,000 1000 $11.00 Application Rate Total Rate $1.00 Actual Direct Labor $5,000 Shirts $1,400 $5,000 $1,000 $7,400 1000 $7.40 Total $1,400.00 Banners $1,400 $5,000 $1,000 $7,400 1000 $7.40 Est Overhead $4,200 4 .1C1 Example The Incredible Hull Direct Labor Direct Materials Sail $100,000 $50,000 Hulls Produced 16 Power $300,000 $100,000 20 Estimated Overhead Cost Estimated Direct Labor Cost $40,000 $400,000 (Divide) Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate $40,000 $400,000 Sail $100,000 Direct Labor Applied Overhead Rate $10,000 Direct Labor Direct Materials $30,000 $100,000 $100,000 $230,000 20 $11,500 $100,000 $50,000 $160,000 16 $10,000 Total Units Unit Cost Total Rate $0.10 Power $300,000 Starting Inc/Dec Est Overhead $40,000 New Est Estimated Overhead Cost Estimated Direct Labor Cost $40,000 $400,000 $200,000.0 -$200,000.0 (Divide) Est. Budgeted Overhead Budgeted Cost Labor Hrs $240,000 $200,000 Application Rate Applied Overhead = Sail Application Rate (x) 1.20 Actual Direct Labor $100,000 $240,000.0 $200,000.0 Total Rate $1.20 Total $120,000.00 The Incredible Hull Sail $120,000 $100,000 $50,000 $270,000 16 $16,875 Applied Overhead Direct Labor Direct Materials Total Units Unit Cost Power $120,000 $100,000 $100,000 $320,000 20 $16,000 Est Overhead $240,000 4 .1 D1 - Activity Drivers Hats $5,000 $1,000 Direct Materials Direct Labor Overhead Cost (Est $3000) Direct Labor Rate (Est $3000) Invrease of $500 Overhead Shirts $5,000 $1,000 Banners $5,000 $1,000 3000 3000 Activity Cost Pool Supervision Inspection Depreciation Est Cost Est Activity Level $3,000.00 DL Cost 10 Inspections $2,000.00 Machine Hours $600.00 $400.00 $2,000.00 Application Rate (Divide) Applied Overhead = Banners Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) 0.20 Application Rate (Divide) Applied Overhead = Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) 40.00 Application Rate (Divide) Applied Overhead = $400 $10 Actual Direct Labor $1,000 Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) 1.00 Activity Rate Per Activity $600 $3,000 Actual Direct Labor $1,000 Actual Direct Labor $1,000 Est Cost Supervision Inspection Depreciation Total Cost per Unit $2,000 $2,000 Total Activity Rate $0.20 Total $200.00 Total Activity Rate $40.00 Total $40,000.00 Total Activity Rate $1.00 Total $1,000.00 Est Activity Level DL Cost Inspections Machine Hours $0.20 $40.00 $1.00 $41.20 4.1D1 Example The Incredible Hull Direct Labor Direct Materials Sail $100,000 $50,000 Hulls Produced 16 Power $300,000 $100,000 20 Estimated Overhead Cost Estimated Direct Labor Cost Activity Cost Pool Supervision Inspection Depreciation $40,000 $400,000 Est Cost Est Activity Level $200,000.00 DL Cost 500 Inspections $1,000.00 Machine Hours $50,000.00 $50,000.00 $140,000.00 $240,000.00 Application Rate (Divide) Applied Overhead = Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) 0.25 Application Rate (Divide) Applied Overhead = Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) 100.00 Application Rate (Divide) $50,000 $200,000 Actual Direct Labor $100,000 $50,000 $500 Actual Direct Labor $100,000 Est. Budgeted Overhead Budgeted Cost Labor Hrs Applied Overhead = Application Rate (x) 140.00 Activity Cost Pool Supervision Inspection Depreciation Est Cost $140,000 $1,000 Actual Direct Labor $100,000 Total Activity Rate $0.25 Total $25,000.00 Total Activity Rate $100.00 Total $10,000,000.00 Total Activity Rate $140.00 Total $14,000,000.00 Est Activity Level $0.25 DL Cost $100.00 Inspections $140.00 Machine Hours $240.25 4.1 E1 - Production- Cost Cross Subsidization The Company Solve the Activity Rate if Not Given ProPats Hats Shirts Direct Labor Direct Materials $1,000 $5,000 Units Produced 1,000 Activity Cost Pool Supervision Inspection Depreciation 1,000 Est. Annual cost Supervision Application Rate (Divide) Banners $1,000 $5,000 $1,000 $5,000 Applied Overhead = $600 $400 $2,000 $0.20 $40.00 $1.00 Inspection Application Rate (Divide) Per DL$ Per Move Per Machine Hour Applied Overhead = Depreciation Application Rate (Divide) $41.20 Activity Data for Products Manufactored by Com. - GIVEN Activity Data for Products Manufactored by Com. Direct Labor No. of Inspections Machine hours Applied Overhead = Hats Shirts Banners Activity Rate if not Given Activity Cost Pool Supervision Inspection Depreciation $1,000 4 1000 $1,000 4 500 $0.20 $1,000.00 Hats Material Handling $40.00 $4.00 $160.00 Machine Releted $1.00 $1,000.00 $1,000.00 Material Handling $40.00 $4.00 $160.00 Machine Releted $1.00 $500.00 $500.00 Shirts Machine Releted $1.00 $500.00 $500.00 $0.20 $1,000.00 $200.00 Supervision Activity Rate Direct Labor Total Overhead to Apply $0.20 $1,000.00 $200.00 Hats Total Overhead Appiled Direct Labor Direct Materials Total Cost Total Units Produced Cost Per Unit Application Rate (x) $40.00 Actual Direct Labor $1,000.00 Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) $1.00 Shirts $7.36 $860.00 $1,000.00 $5,000.00 $6,860.00 1,000 $6.86 Actual Direct Labor $1,000.00 Total $1,000.00 Banners Est Activity Level DL Cost Inspections Machine Hours Banners $780.00 $1,000.00 $5,000.00 $6,780.00 1000 $6.78 Shirts $1,360.00 $1,000.00 $5,000.00 $7,360.00 1,000 Est Cost $0.20 $40.00 $1.00 $41.20 Total $40,000.00 $2,000.00 Total Activity Rate $2,000.00 $1.00 Total $41.20 $1,502.00 $780.00 Supervision Activity Rate Direct Labor Total Overhead to Apply Banners Total $200.00 $400.00 Total Activity Rate $10.00 $40.00 Total $41.20 $1,504.00 $860.00 Material Handling $40.00 $2.00 $80.00 $200.00 $1,000 2 500 Est. Budgeted Overhead Budgeted Cost Labor Hrs Total $41.20 $2,004.00 $1,360.00 Supervision Activity Rate Direct Labor Total Overhead to Apply $600 Total Activity Rate $3,000 $0.20 Actual Direct Labor $1,000 $1,000.00 Est. Activity cost Activity Cost $3,000 direct labor dollars $10 inspections $2,000 machine hours Activity Rate - if Given Type here Supervision Material Handling Machine Releted Total Rate Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) 0.20 Final Essay 1 The Company Solve the Activity Rate if Not Given ProPats Hats Direct Labor Direct Materials $1,000 $5,000 Units Produced 1,000 Activity Cost Pool Supervision Inspection Depreciation $1,000 $5,000 1,000 Est. Annual cost Supervision Application Rate (Divide) $1,000 $5,000 Applied Overhead = $600 $400 $2,000 $0.20 $40.00 $1.00 Inspection Application Rate (Divide) Per DL$ Per Move Per Machine Hour Applied Overhead = Depreciation Application Rate (Divide) $41.20 Activity Data for Products Manufactored by Com. - GIVEN Activity Data for Products Manufactored by Com. Direct Labor No. of Inspections Machine hours Applied Overhead = Hats $600 Total Activity Rate $3,000 $0.20 Actual Direct Labor $1,000 Total $200.00 $1,000.00 Est. Activity cost Activity Cost $3,000 direct labor dollars $10 inspections $2,000 machine hours Activity Rate - if Given Type here Supervision Material Handling Machine Releted Total Rate Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) 0.20 Shirts Banners Activity Rate if not Given Activity Cost Pool Supervision Inspection Depreciation $1,000 4 1000 $1,000 4 500 $1,000 2 500 $0.20 Material Handling $40.00 Machine Releted $1.00 $1,000.00 $1,000.00 Application Rate (x) $40.00 $400.00 Total Activity Rate $10.00 $40.00 Actual Direct Labor $1,000.00 Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) $1.00 Est Cost $0.20 $40.00 $1.00 Total $40,000.00 $2,000.00 Total Activity Rate $2,000.00 $1.00 Actual Direct Labor $1,000.00 Total $1,000.00 Total $41.20 $4.00 $160.00 Est. Budgeted Overhead Budgeted Cost Labor Hrs Est Activity Level DL Cost Inspections Machine Hours $2,004.00 $1,360.00 Total $41.20 $1,504.00 $41.20 Hats Supervision Activity Rate Direct Labor Total Overhead to Apply $1,000.00 $200.00 Shirts Activity Rate Direct Labor $0.20 $1,000.00 Material Handling $40.00 $4.00 Machine Releted $1.00 $500.00 Total Overhead to Apply Supervision $200.00 $160.00 $500.00 $860.00 $0.20 $1,000.00 $200.00 Material Handling $40.00 $2.00 $80.00 Machine Releted $1.00 $500.00 $500.00 Total $41.20 $1,502.00 $780.00 Banners Supervision Activity Rate Direct Labor Total Overhead to Apply Hats Total Overhead Appiled Direct Labor Direct Materials Total Cost Total Units Produced 1,000 Cost Per Unit Direct Labor Material Handling Total Overhead to Apply $- Shirts $1,360.00 $1,000.00 $5,000.00 $7,360.00 $7.36 # VALUE! $Activity Rate Direct Labor Machine Releted Total Overhead to Apply $860.00 $1,000.00 $5,000.00 $6,860.00 1,000 $6.86 $40.00 $274.40 $- Total Overhead Appiled $- Supervision $1.00 $500.00 $# VALUE! $200.00 # VALUE! $Total Units Produced $# VALUE! $100,000.00 $100,000.00 $50,000.00 $100,000.00 $150,000.00 # VALUE! Hats Shirts #VALUE! #VALUE! Total Overhead Appiled Direct Labor Direct Materials Total Cost Total Units Produced Cost Per Unit Banners $780.00 $1,000.00 $5,000.00 $6,780.00 1000 $6.78 $2.00 $13.56 $42.00 # VALUE! Total $200.00 $501.00 #VALUE! $#VALUE! #VALUE! #VALUE! 4.1E1 Example The Company Direct Labor Direct Materials Hulls Produced ProPats Sail $100,000.00 $50,000.00 Power $100,000.00 $100,000.00 16 Est. Annual cost $50,000.00 $50,000.00 $140,000.00 Est. Activity cost $200,000.00 $500.00 $1,000.00 Supervision Material Handling Machine Releted Total Rate $0.25 $100.00 $140.00 $240.25 Per DL$ Per Move Per Machine Hour Sail $100,000.00 $200.00 $300.00 Power $100,000.00 $300.00 $700.00 Applied Overhead = Solve the Activity Rate if Not Given Supervision Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) 0.25 $50,000 Total Activity Rate $200,000 $0.25 Actual Direct Labor $100,000 Total $25,000.00 20 Activity Cost Pool Supervision Material Handling Machine Releted Application Rate (Divide) Name 3 Material Handling Application Rate (Divide) Activity Cost direct labor dollars inspections machine hours Applied Overhead = Activity Rate - if Given Type here Activity Data for Products Manufactored by Com. - GIVEN Activity Data for Products Manufactored by Com. Direct Labor Material Handling Machine Releted Sail Machine Releted Application Rate (Divide) Applied Overhead = Supervision Name 3 Activity Rate if not Given Activity Cost Pool Supervision Inspection Depreciation Material Handling $100.00 $200.00 $20,000.00 Machine Releted $140.00 $300.00 $42,000.00 Total $240.25 $100,500.00 $87,000.00 Activity Data for Products Manufactored by Com. Labor Direct Activity Rate $0.25 $100.00 Direct Labor $100,000.00 $300.00 Total Overhead to Apply $25,000.00 $30,000.00 Material Handling $140.00 $700.00 $98,000.00 Total $240.25 $101,000.00 $153,000.00 Activity Rate $140.00 $$- Total $240.25 $$- Activity Rate Direct Labor Total Overhead to Apply $0.25 $100,000.00 $25,000.00 Power Name 3 $- Sail Activity Rate Direct Labor Total Overhead to Apply $0.25 $$- $100.00 $$- Total Overhead Appiled Direct Labor Direct Materials Total Cost Total Units Produced Cost Per Unit Sail $87,000.00 $100,000.00 $50,000.00 $237,000.00 16 $14,812.50 Power $153,000.00 $100,000.00 $100,000.00 $353,000.00 20 $17,650.00 Name 3 $- $# DIV/0! Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) $100.00 Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) $140.00 Est Cost $0.25 $100.00 $140.00 $240.25 $50,000.00 Total Activity Rate $500.00 $100.00 Actual Direct Labor $100,000.00 Total $10,000,000.00 $140,000.00 Total Activity Rate $1,000.00 $140.00 Actual Direct Labor $100,000.00 Est Activity Level DL Cost Inspections Machine Hours Total $14,000,000.00 Production- Cost Cross Subsidization Solve the Activity Rate if Not Given T he Company Radio CD Players Supervision Application Rate ( Divide) Name 3 Direct Labor Direct Materials Applied Overhead = Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) 0.40 $60,000 T otal Activity Rate $150,000 $ 0.40 Actual Direct Labor $- T otal $- Units Produced Activity Cost Pool Supervision Inspection Depreciation Est. Annual cost $60,000 $40,000 $400,000 Activity Rate - if Given Type here Supervision Material Handling Machine Releted T otal Rate Est. Activity cost Activity Cost $150,000 direct labor dollars $2,000 i nspections $10,000 machine hours $0.40 $20.00 $40.00 Applied Overhead = Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) $20.00 Depreciation Application Rate (Divide) Per DL$ Per Move Per Machine Hour $ 60.40 Applied Overhead = Activity Data for Products Manufactored by Com. - GIVEN Activity Data for Products Radio CD Players Direct Labor $120,000.00 $30,000.00 No. of Inspections $500.00 $1,500.00 Machine hours $5,000.00 $5,000.00 Radio Inspection Application Rate (Divide) Name 3 Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) $40.00 Activity Rate if not Given Activity Cost Pool Supervision Inspection Depreciation Activity Rate Direct Labor T otal Overhead to Apply Supervision $0.40 $120,000.00 $ 48,000.00 Material Handling $20.00 $500.00 $ 10,000.00 Machine Releted $40.00 $5,000.00 $ 200,000.00 Supervision $0.40 $30,000.00 $ 12,000.00 Material Handling $20.00 $1,500.00 $ 30,000.00 Machine Releted $40.00 $5,000.00 $ 200,000.00 Supervision $0.40 $$- Material Handling $20.00 $$- Machine Releted $40.00 $$- Radio $258,000.00 $$$258,000.00 #DIV/0! CD Players $242,000.00 $$$242,000.00 #DIV/0! T otal $- Est Activity Level DL Cost Inspections Machine Hours T otal $60.40 $$- T otal Overhead Appiled Direct Labor Direct Materials T otal Cost T otal Units Produced Cost Per Unit $- $400,000.00 T otal Activity Rate $10,000.00 $ 40.00 Actual Direct Labor $- T otal $60.40 $36,500.00 $ 242,000.00 Name 3 Activity Rate Direct Labor T otal Overhead to Apply T otal T otal $60.40 $125,500.00 $ 258,000.00 CD Players Activity Rate Direct Labor T otal Overhead to Apply Est Cost $0.40 $20.00 $40.00 $60.40 $40,000.00 T otal Activity Rate $2,000.00 $ 20.00 Actual Direct Labor $- Name 3 $$$$$#DIV/0! 4.1 Test 1.1 Direct Labor Application Rate Est. Budgted OH (Divide) Bdgtd Cost Applied Overhead = $500,000 T otal Activity Rate $2,500,000 $ 0.20 Application Rate 0.20 Actual $2,400,000 Total $ 480,000.00 4 .1 Test 1.2 Company Name Shirts Hats Banners Direct Materials Direct Labor U nits Produced Assume Est OH cost E st Direct Labor $60,000 $100,000 Banners Banners Direct Materials Direct Labor O verhead Units Produced $60,000 $100,000 $- Cost 2 ,000 2 ,000 - $30.00 $50.00 $0.50 $ 80.50 T otal Application Rate Budg eted Overhead (Divide) Budg eted Cost Labor Hrs $$- T otal Rate $ 0.50 4 .1 Test 1.6 T he Company Solve the Activity Rate if Not Given ProPats Radio CD Players Supervision Application Rate ( Divide) Name 3 Direct Labor Direct Materials Applied Overhead = Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) 0.40 $60,000 T otal Activity Rate $150,000 $ 0.40 Actual Direct Labor $- T otal $- Units Produced Activity Cost Pool Supervision Inspection Depreciation Est. Annual cost $60,000 $40,000 $400,000 Activity Rate - if Given Type here Supervision Inspection Depreciation T otal Rate Inspection Application Rate (Divide) Est. Activity cost Activity Cost $150,000 direct labor dollars $2,000 i nspections $10,000 machine hours $0.40 $20.00 $40.00 Applied Overhead = Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) $20.00 Depreciation Application Rate (Divide) Per DL$ Per Move Per Machine Hour $ 60.40 Applied Overhead = Activity Data for Products Manufactored by Com. - GIVEN Activity Data for Products Radio CD Players Direct Labor $120,000.00 $30,000.00 No. of Inspections $500.00 $1,500.00 Machine hours $5,000.00 $5,000.00 Name 3 Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) $40.00 Activity Rate if not Given Activity Cost Pool Supervision Inspection Depreciation Radio Activity Rate Direct Labor T otal Overhead to Apply Supervision $0.40 $120,000.00 $ 48,000.00 Inspection $20.00 $500.00 $ 10,000.00 Depreciation $40.00 $5,000.00 $ 200,000.00 Supervision $0.40 $30,000.00 $ 12,000.00 Inspection $20.00 $1,500.00 $ 30,000.00 Depreciation $40.00 $5,000.00 $ 200,000.00 Supervision $0.40 $$- Inspection $20.00 $$- Depreciation $40.00 $$- CD Players $242,000.00 $$$242,000.00 #DIV/0! CD Players Name 3 T otal $- Est Activity Level DL Cost Inspections Machine Hours T otal $60.40 $$- Radio $258,000.00 $$$258,000.00 #DIV/0! $- $400,000.00 T otal Activity Rate $10,000.00 $ 40.00 Actual Direct Labor $- Name 3 T otal Overhead Appiled Direct Labor Direct Materials T otal Cost T otal Units Produced Cost Per Unit T otal T otal $60.40 $36,500.00 $ 242,000.00 Name 3 Activity Rate Direct Labor T otal Overhead to Apply Actual Direct Labor $- T otal $60.40 $125,500.00 $ 258,000.00 CD Players Activity Rate Direct Labor T otal Overhead to Apply Est Cost $0.40 $20.00 $40.00 $60.40 $40,000.00 T otal Activity Rate $2,000.00 $ 20.00 $$$$$#DIV/0! 4.1 Test 1.7 T he Company Solve the Activity Rate if Not Given ProPats Radio Supervision Application Rate ( Divide) Direct Labor Direct Materials Applied Overhead = Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) 0.40 $60,000 T otal Activity Rate $150,000 $ 0.40 Actual Direct Labor $- T otal $- Units Produced Activity Cost Pool Supervision Inspection Depreciation Est. Annual cost $60,000 $40,000 $400,000 Activity Rate - if Given Type here Supervision Inspection Depreciation T otal Rate Inspection Application Rate (Divide) Est. Activity cost Activity Cost $150,000 direct labor dollars $2,000 i nspections $10,000 machine hours $0.40 $20.00 $40.00 Applied Overhead = Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) $20.00 Depreciation Application Rate (Divide) Per DL$ Per Move Per Machine Hour $ 60.40 Applied Overhead = Activity Data for Products Manufactored by Com. - GIVEN Activity Data for Products Radio CD Players Direct Labor $120,000.00 $30,000.00 No. of Inspections $500.00 $1,500.00 Machine hours $5,000.00 $5,000.00 Name 3 Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) $40.00 Activity Rate if not Given Activity Cost Pool Supervision Inspection Depreciation Radio Activity Rate Direct Labor T otal Overhead to Apply Supervision $0.40 $120,000.00 $ 48,000.00 Inspection $20.00 $500.00 $ 10,000.00 Depreciation $40.00 $5,000.00 $ 200,000.00 Supervision $0.40 $30,000.00 $ 12,000.00 Inspection $20.00 $1,500.00 $ 30,000.00 Depreciation $40.00 $5,000.00 $ 200,000.00 Supervision $0.40 $$- Inspection $20.00 $$- Depreciation $40.00 $$- CD Players $242,000.00 $$$242,000.00 #DIV/0! CD Players $30,000 $500,000 Name 3 T otal $- Est Activity Level DL Cost Inspections Machine Hours T otal $60.40 $$- Radio $258,000.00 $$$258,000.00 #DIV/0! $- $400,000.00 T otal Activity Rate $10,000.00 $ 40.00 Actual Direct Labor $- Name 3 T otal Overhead Appiled Direct Labor Direct Materials T otal Cost T otal Units Produced Cost Per Unit T otal T otal $60.40 $36,500.00 $ 242,000.00 Name 3 Activity Rate Direct Labor T otal Overhead to Apply Actual Direct Labor $- T otal $60.40 $125,500.00 $ 258,000.00 CD Players Activity Rate Direct Labor T otal Overhead to Apply Est Cost $0.40 $20.00 $40.00 $60.40 $40,000.00 T otal Activity Rate $2,000.00 $ 20.00 $$$$$#DIV/0! 4.1 Test 1.10 The Company Direct Labor Direct Materials Units Produced Solve the Activity Rate if Not Given ProPats Radio $120,000 $1,500,000 20,000 Activity Cost Pool Supervision Inspection Machine Use Applied Overhead = Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) 0.40 $60,000 T otal Activity Rate $150,000 $ 0.40 Actual Direct Labor $120,000 T otal $ 48,000.00 10,000 Est. Annual cost $60,000 $40,000 $400,000 Activity Rate - if Given Type here Supervision Inspection Machine Use T otal Rate Supervision Application Rate ( Divide) Inspection Application Rate (Divide) Est. Activity cost Activity Cost $150,000 direct labor dollars $2,000 i nspections $10,000 machine hours $0.40 $20.00 $40.00 Applied Overhead = Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) $20.00 Machine Use Application Rate (Divide) Per DL$ Per Move Per Machine Hour $ 60.40 Applied Overhead = Activity Data for Products Manufactored by Com. - GIVEN Activity Data for Products Radio CD Players Direct Labor $120,000.00 $30,000.00 No. of Inspections $500.00 $1,500.00 Machine hours $5,000.00 $5,000.00 Name 3 Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) $40.00 Activity Rate if not Given Activity Cost Pool Supervision Inspection Depreciation Radio Activity Rate Direct Labor T otal Overhead to Apply Supervision $0.40 $120,000.00 $ 48,000.00 Inspection $20.00 $500.00 $ 10,000.00 Machine Use $40.00 $5,000.00 $ 200,000.00 Supervision $0.40 $30,000.00 $ 12,000.00 Inspection $20.00 $1,500.00 $ 30,000.00 Machine Use $40.00 $5,000.00 $ 200,000.00 Supervision $0.40 $$- Inspection $20.00 $$- Machine Use $40.00 $$- T otal $60.40 $$- Radio $258,000.00 $ 120,000.00 $ 1,500,000.00 $1,878,000.00 20,000 $93.90 CD Players $242,000.00 $ 30,000.00 $ 500,000.00 $772,000.00 10,000 $77.20 Name 3 T otal Overhead Appiled Direct Labor Direct Materials T otal Cost T otal Units Produced Cost Per Unit CD Players $30,000 $500,000 Name 3 T otal $ 4,800,000.00 Est Activity Level DL Cost Inspections Machine Hours T otal $60.40 $36,500.00 $ 242,000.00 Name 3 Activity Rate Direct Labor T otal Overhead to Apply T otal $ 2,400,000.00 $400,000.00 T otal Activity Rate $10,000.00 $ 40.00 Actual Direct Labor $120,000.00 T otal $60.40 $125,500.00 $ 258,000.00 CD Players Activity Rate Direct Labor T otal Overhead to Apply Est Cost $0.40 $20.00 $40.00 $60.40 $40,000.00 T otal Activity Rate $2,000.00 $ 20.00 Actual Direct Labor $120,000.00 $$$$$#DIV/0! 4.1 Test 1.10 The Company Direct Labor Direct Materials Units Produced Solve the Activity Rate if Not Given ProPats Radio $120,000 $1,500,000 20,000 Activity Cost Pool Supervision Inspection Machine Use Applied Overhead = Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) 0.40 $60,000 T otal Activity Rate $150,000 $ 0.40 Actual Direct Labor $120,000 T otal $ 48,000.00 10,000 Est. Annual cost $60,000 $40,000 $400,000 Activity Rate - if Given Type here Supervision Inspection Machine Use T otal Rate Supervision Application Rate ( Divide) Inspection Application Rate (Divide) Est. Activity cost Activity Cost $150,000 direct labor dollars $2,000 i nspections $10,000 machine hours $0.40 $20.00 $40.00 Applied Overhead = Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) $20.00 Machine Use Application Rate (Divide) Per DL$ Per Move Per Machine Hour $ 60.40 Applied Overhead = Activity Data for Products Manufactored by Com. - GIVEN Activity Data for Products Radio CD Players Direct Labor $120,000.00 $30,000.00 No. of Inspections $500.00 $1,500.00 Machine hours $5,000.00 $5,000.00 Name 3 Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) $40.00 Activity Rate if not Given Activity Cost Pool Supervision Inspection Depreciation Radio Activity Rate Direct Labor T otal Overhead to Apply Supervision $0.40 $120,000.00 $ 48,000.00 Inspection $20.00 $500.00 $ 10,000.00 Machine Use $40.00 $5,000.00 $ 200,000.00 Supervision $0.40 $30,000.00 $ 12,000.00 Inspection $20.00 $1,500.00 $ 30,000.00 Machine Use $40.00 $5,000.00 $ 200,000.00 Supervision $0.40 $$- Inspection $20.00 $$- Machine Use $40.00 $$- T otal $60.40 $$- Radio $258,000.00 $ 120,000.00 $ 1,500,000.00 $1,878,000.00 20,000 $93.90 CD Players $242,000.00 $ 30,000.00 $ 500,000.00 $772,000.00 10,000 $77.20 CD Players $30,000 $500,000 Name 3 T otal $ 4,800,000.00 Name 3 T otal Overhead Appiled Direct Labor Direct Materials T otal Cost T otal Units Produced Cost Per Unit $400,000.00 T otal Activity Rate $10,000.00 $ 40.00 Actual Direct Labor $120,000.00 Est Activity Level DL Cost Inspections Machine Hours T otal $60.40 $36,500.00 $ 242,000.00 Name 3 Activity Rate Direct Labor T otal Overhead to Apply T otal $ 2,400,000.00 T otal $60.40 $125,500.00 $ 258,000.00 CD Players Activity Rate Direct Labor T otal Overhead to Apply Est Cost $0.40 $20.00 $40.00 $60.40 $40,000.00 T otal Activity Rate $2,000.00 $ 20.00 Actual Direct Labor $120,000.00 $$$$$#DIV/0! 4.1 Test 1.10 The Company Direct Labor Direct Materials Solve the Activity Rate if Not Given ProPats Radio $120,000 $1,500,000 Units Produced 20,000 Activity Cost Pool Supervision Inspection Machine Use Est. Annual cost $60,000 $40,000 $400,000 Activity Rate - if Given Type here Supervision Inspection Machine Use T otal Rate Supervision Application Rate ( Divide) Applied Overhead = Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) 0.40 $60,000 T otal Activity Rate $150,000 $ 0.40 Actual Direct Labor $120,000 T otal $ 48,000.00 10,000 Inspection Application Rate (Divide) Est. Activity cost Activity Cost $150,000 direct labor dollars $2,000 i nspections $10,000 machine hours $0.40 $20.00 $40.00 Applied Overhead = Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) $20.00 Machine Use Application Rate (Divide) Per DL$ Per Move Per Machine Hour $ 60.40 Applied Overhead = Activity Data for Products Manufactored by Com. - GIVEN Activity Data for Products Radio CD Players Direct Labor $120,000.00 $30,000.00 No. of Inspections $500.00 $1,500.00 Machine hours $5,000.00 $5,000.00 Name 3 Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) $40.00 Activity Rate if not Given Activity Cost Pool Supervision Inspection Depreciation Radio Activity Rate Direct Labor T otal Overhead to Apply Supervision $0.40 $120,000.00 $ 48,000.00 Inspection $20.00 $500.00 $ 10,000.00 Machine Use $40.00 $5,000.00 $ 200,000.00 Supervision $0.40 $30,000.00 $ 12,000.00 Inspection $20.00 $1,500.00 $ 30,000.00 Machine Use $40.00 $5,000.00 $ 200,000.00 Supervision $0.40 $$- Inspection $20.00 $$- Machine Use $40.00 $$- T otal $60.40 $$- T otal Overhead Appiled Direct Labor Direct Materials T otal Cost T otal Units Produced Cost Per Unit Radio $258,000.00 $ 120,000.00 $ 1,500,000.00 $1,878,000.00 20,000 $93.90 CD Players $242,000.00 $ 30,000.00 $ 500,000.00 $772,000.00 10,000 $77.20 T otal $ 4,800,000.00 Est Activity Level DL Cost Inspections Machine Hours T otal $60.40 $36,500.00 $ 242,000.00 Name 3 Activity Rate Direct Labor T otal Overhead to Apply T otal $ 2,400,000.00 $400,000.00 T otal Activity Rate $10,000.00 $ 40.00 Actual Direct Labor $120,000.00 T otal $60.40 $125,500.00 $ 258,000.00 CD Players Activity Rate Direct Labor T otal Overhead to Apply Est Cost $0.40 $20.00 $40.00 $60.40 $40,000.00 T otal Activity Rate $2,000.00 $ 20.00 Actual Direct Labor $120,000.00 Name 3 $$$$$#DIV/0! 4.1 Test 2.1 Direct Labor Application Rate Est. Budgted OH (Divide) Bdgtd Cost Applied Overhead = $500,000 T otal Activity Rate $2,000,000 $ 0.25 Application Rate 0.25 Actual $2,400,000 Total $ 600,000.00 4 .1 Test 2.2 Company Name Shirts Hats Banners Direct Materials Direct Labor U nits Produced Assume Est OH cost E st Direct Labor $40,000 $30,000 1 ,000 Banners Banners Units Produced Direct Materials Direct Labor O verhead $40,000 $30,000 $0.25 Cost 1 ,000 1 ,000 4 0,000 $40.00 $30.00 $0 $ 70.00 T otal Application Rate Budg eted Overhead (Divide) Budg eted Cost Labor Hrs C orrected Answer DM $ 30,000.00 DL $ 4 0,000.00 All OH ( 4 0000*$.25) U nits Cost per unit $$- T otal Rate $ 0.25 $ 30,000.00 $ 4 0,000.00 $ 10,000.00 $80,000.00 1 ,000.00 $80.00 1 ,000.00 4 .1 Test 2.6 The Company ProPats Radios Solve the Activity Rate if Not Given Cd Players Supervision Application Rate ( Divide) Name 3 Direct Labor Direct Materials Applied Overhead = Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) 0.40 $60,000 T otal Activity Rate $150,000 $ 0.40 Actual Direct Labor $- T otal $- Units Produced Activity Cost Pool Supervision Inspection Machine Use Est. Annual cost $60,000 $40,000 $400,000 Activity Rate - if Given Type here Supervision Inspection Machine Use T otal Rate $0.40 $20.00 $40.00 Inspection Application Rate (Divide) Est. Activity cost Activity Cost $150,000 direct labor dollars $2,000 i nspections $10,000 machine hours Per DL$ Per Move Per Machine Hour Applied Overhead = Automated $0.40 $20.00 $40.00 Application Rate (x) $20.00 Machine Use Application Rate (Divide) $ 60.40 Applied Overhead = Activity Data for Products Manufactored by Com. - GIVEN Activity Data for Products Radios Cd Players Direct Labor $120,000.00 $30,000.00 No. of Inspections $500.00 $1,500.00 Machine hours $5,000.00 $5,000.00 Est. Budgeted Overhead Budgeted Cost Labor Hrs Name 3 Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) $40.00 Activity Rate if not Given Activity Cost Pool Supervision Inspection Depreciation Radios Activity Rate Direct Labor T otal Overhead to Apply Supervision $0.40 $120,000.00 $ 48,000.00 Inspection $20.00 $500.00 $ 10,000.00 Machine Use $40.00 $5,000.00 $ 200,000.00 Supervision $0.40 $30,000.00 $ 12,000.00 Inspection $20.00 $1,500.00 $ 30,000.00 Machine Use $40.00 $5,000.00 $ 200,000.00 Supervision $0.40 $$- Inspection $20.00 $$- Machine Use $40.00 $$- Radios $258,000.00 $$$258,000.00 #DIV/0! Cd Players $242,000.00 $$$242,000.00 #DIV/0! $- $400,000.00 T otal Activity Rate $10,000.00 $ 40.00 Actual Direct Labor $- T otal $- Est Activity Level DL Cost Inspections Machine Hours T otal $60.40 $$- T otal Overhead Appiled Direct Labor Direct Materials T otal Cost T otal Units Produced Cost Per Unit T otal T otal $60.40 $36,500.00 $ 242,000.00 Name 3 Activity Rate Direct Labor T otal Overhead to Apply Actual Direct Labor $- T otal $60.40 $125,500.00 $ 258,000.00 Cd Players Activity Rate Direct Labor T otal Overhead to Apply Est Cost $0.40 $20.00 $40.00 $60.40 $40,000.00 T otal Activity Rate $2,000.00 $ 20.00 Name 3 $$$$$#DIV/0! 4.1 Test 2 The Company ProPats Name 1 Solve the Activity Rate if Not Given Name 2 Supervision Application Rate ( Divide) Name 3 Direct Labor Direct Materials Applied Overhead = Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) 0.40 $60,000 T otal Activity Rate $150,000 $ 0.40 Actual Direct Labor $- T otal $- Units Produced Activity Cost Pool Supervision Inspection Machine Use Est. Annual cost $60,000 $40,000 $400,000 Activity Rate - if Given Type here Supervision Inspection Machine Use T otal Rate Per DL$ Per Move Per Machine Hour Applied Overhead = Automated $0.40 $20.00 $40.00 Applied Overhead = Name 1 Activity Rate Direct Labor T otal Overhead to Apply Supervision Name 2 Activity Rate Direct Labor T otal Overhead to Apply Supervision Name 3 Activity Rate Direct Labor T otal Overhead to Apply Supervision Name 3 Inspection $$Inspection $$$Inspection $$$- Name 1 Machine Use Name 2 $$$$- - T otal $- $400,000.00 T otal Activity Rate $10,000.00 $ 40.00 Actual Direct Labor $- T otal $- Est Activity Level DL Cost Inspections Machine Hours $$$$$$T otal $$$- $$$- Name 3 $$$$- #DIV/0! Est Cost $0.40 $20.00 $40.00 $60.40 Actual Direct Labor $- T otal $$$- $$$- Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) $40.00 $40,000.00 T otal Activity Rate $2,000.00 $ 20.00 T otal $$$- Machine Use $$$- Application Rate (x) $20.00 Activity Rate if not Given Activity Cost Pool Supervision Inspection Depreciation Machine Use $$$- $- Est. Budgeted Overhead Budgeted Cost Labor Hrs Machine Use Application Rate (Divide) $- Activity Data for Products Manufactored by Com. - GIVEN Activity Data for Products Name 1 Name 2 Direct Labor No. of Inspections Machine hours T otal Overhead Appiled Direct Labor Direct Materials T otal Cost T otal Units Produced Cost Per Unit Inspection Application Rate (Divide) Est. Activity cost Activity Cost $150,000 direct labor dollars $2,000 i nspections $10,000 machine hours $$$$$- #DIV/0! #DIV/0! 4.1 Test 2.10 The Company Direct Labor Direct Materials ProPats Radio $120,000 $1,500,000 Units Produced 20,000 Activity Cost Pool Supervision Inspection Machine Use Supervision Application Rate ( Divide) Name 3 Applied Overhead = Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) 0.40 $60,000 T otal Activity Rate $150,000 $ 0.40 Actual Direct Labor $120,000 T otal $ 48,000.00 10,000 Est. Annual cost $60,000 $40,000 $400,000 Activity Rate - if Given Type here Supervision Inspection Machine Use T otal Rate Solve the Activity Rate if Not Given CD Player $30,000 $500,000 $0.40 $20.00 $40.00 Inspection Application Rate (Divide) Est. Activity cost Activity Cost $150,000 direct labor dollars $2,000 i nspections $10,000 machine hours Per DL$ Per Move Per Machine Hour Applied Overhead = Automated $0.40 $20.00 $40.00 Machine Use Application Rate (Divide) $ 60.40 Applied Overhead = Activity Data for Products Manufactored by Com. - GIVEN Activity Data for Products Radio CD Player Direct Labor $120,000.00 $30,000.00 No. of Inspections $500.00 $1,500.00 Machine hours $5,000.00 $5,000.00 Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) $20.00 Name 3 Radio Activity Rate Direct Labor T otal Overhead to Apply Supervision $0.40 $120,000.00 $ 48,000.00 Inspection $20.00 $500.00 $ 10,000.00 Machine Use $40.00 $5,000.00 $ 200,000.00 T otal $60.40 $125,500.00 $ 258,000.00 CD Player Activity Rate Direct Labor T otal Overhead to Apply Supervision $0.40 $30,000.00 $ 12,000.00 Inspection $20.00 $1,500.00 $ 30,000.00 Machine Use $40.00 $5,000.00 $ 200,000.00 T otal $60.40 $36,500.00 $ 242,000.00 Name 3 Activity Rate Direct Labor T otal Overhead to Apply Supervision $0.40 $$- Inspection $20.00 $$- Machine Use $40.00 $$- T otal $60.40 $$- T otal Overhead Appiled Direct Labor Direct Materials T otal Cost T otal Units Produced Cost Per Unit Radio $258,000.00 $ 120,000.00 $ 1,500,000.00 $1,878,000.00 20,000 $93.90 CD Player $242,000.00 $ 30,000.00 $ 500,000.00 $772,000.00 10,000 $77.20 Name 3 $$$$$#DIV/0! Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) $40.00 Activity Rate if not Given Activity Cost Pool Supervision Inspection Depreciation $- Est Cost $0.40 $20.00 $40.00 $60.40 $40,000.00 T otal Activity Rate $2,000.00 $ 20.00 Actual Direct Labor $120,000.00 T otal $ 2,400,000.00 $400,000.00 T otal Activity Rate $10,000.00 $ 40.00 Actual Direct Labor $120,000.00 Est Activity Level DL Cost Inspections Machine Hours T otal $ 4,800,000.00 4.2 A Cash Receipts Budget 4.2 A1 30% 50% 20% 100% Feb $80,000.00 $24,000.00 $$$24,000.00 Mar $60,000.00 $18,000.00 $40,000.00 $$58,000.00 Apr $100,000.00 $30,000.00 $30,000.00 $16,000.00 $76,000.00 May $150,000.00 $45,000.00 $50,000.00 $12,000.00 $107,000.00 Jun $180,000.00 $54,000.00 $75,000.00 $20,000.00 $149,000.00 20% 70% 10% 100% May $100,000.00 $20,000.00 $$$20,000.00 June $120,000.00 $24,000.00 $70,000.00 $$94,000.00 July $140,000.00 $28,000.00 $84,000.00 $10,000.00 $122,000.00 August $180,000.00 $36,000.00 $98,000.00 $12,000.00 $146,000.00 September $210,000.00 $42,000.00 $126,000.00 $14,000.00 $182,000.00 50% 30% 20% 100% Collections of Current Month (+) Collections of Sales from Past Month (+) Collections of Sales from 2 Months past (=) Cash for the month May $50,000.00 $25,000.00 $$$25,000.00 June $58,000.00 $29,000.00 $15,000.00 $$44,000.00 July $60,000.00 $30,000.00 $17,400.00 $10,000.00 $57,400.00 August $75,000.00 $37,500.00 $18,000.00 $11,600.00 $67,100.00 September $80,000.00 $40,000.00 $22,500.00 $12,000.00 $74,500.00 Jan $600.00 $180.00 $- Feb $500.00 $150.00 $$150.00 Mar $700.00 $210.00 $$210.00 Example A1 Collections of Current Month (+) Collections of Sales from Past Month (+) Collections of Sales from 2 Months past (=) Cash for the month 4.2 A Master Formula Collections of Current Month (+) Collections of Sales from Past Month (+) Collections of Sales from 2 Months past (=) Cash for the month 4.2 B Purchase Budget Expected Sales For the Month (+) Desired Ending Inventory (-) Beginning inventory (=) # Of units needing to be Purchased 4.2 B Purchase Budget Expected Sales For the Month (+) Desired Ending Inventory (-) Beginning inventory (=) # Of units needing to be Purchased Purchase Price per unit 4.2 B Purchase Budget Example Expected Sales For the Month (+) Desired Ending Inventory (-) Beginning inventory (=) # Of units needing to be Purchased Purchase Price per unit 4.2 B Purchase Budget Expected Sales For the Month (+) Desired Ending Inventory (-) Beginning inventory (=) # Of units needing to be Purchased Purchase Price per unit 30% $$- $$- 30% July 10,000.00 2,400.00 2,000.00 10,400.00 $52,000.00 20% 20% $5.00 Units 30% 30% $15.00 August 12,000.00 3,000.00 2,400.00 12,600.00 $63,000.00 Apr 25,000.00 9,000.00 7,500.00 26,500.00 $397,500.00 Units May 30,000.00 9,900.00 9,000.00 30,900.00 $463,500.00 July 4.2 C Cash Disbursemetn June July Purchases 30% Advertising 70% Commissions 100% Rent Utilities Wages Mar 700.00 500.00 210.00 150.00 560.00 $2,800.00 $80,000 $5,000 $4,000 $9,000 $2,000 $12,000 July 30% 70% 210.00 490.00 $2,450.00 $24,000 $49,000 $32,000 $105,000 July June Purchases Advertising Commissions Rent Utilities Wages Sept $27,000 $70,000 $34,000 $131,000 $16,000 $900 $1,800 $700 $300 $2,700 September $15,000 $800 $1,600 $700 $300 $3,100 August July June $3,000.00 $3,600.00 $7,000.00 $5,200.00 $15,800.00 $90,000 $5,000 $5,000 $9,000 $3,000 $12,000 $30,000 $56,000 $38,500 $124,500 $12,000 $800 $1,000 $700 $300 $2,400 $10,000.00 30% 70% Sept $100,000 $6,000 $7,000 $9,000 $2,500 $14,000 August $21,000 Jun 4.2 C Cash Disbursement Test 1 Payments of Current Month Purchase (+) Payment of Purchase from Month B4 Curr. Mnt (+) Payment of Exepenses in Month incurred in Current Months (=) Cash Disbursemetn for the month 10,500.00 24,500.00 $367,500.00 Feb August $70,000 June ` (+) Payment of Purchase from Month B4 Curr. Mnt (+) Payment of Exepenses in Month incurred in Current Months (=) Cash Disbursemetn for the month Jul 35,000.00 September October November December $12,000.00 $16,000.00 $28,000.00 $20,000.00 $18,000.00 $24,000.00 $42,000.00 $19,000.00 $23,000.00 $22,000.00 $53,000.00 $75,000.00 $84,000.00 40% 60% 4.2 C Cash Disbursemetn Example Cash Paid in Munth Purchase is Cash Paid in Month Following pur $- September October November December $30,000.00 $40,000.00 $70,000.00 $50,000.00 $2,000.00 $4,000.00 $2,000.00 $3,000.00 $2,000.00 $4,000.00 $5,000.00 $5,000.00 $5,000.00 $1,000.00 $2,000.00 $2,000.00 $8,000.00 $10,000.00 $9,000.00 Purchases Advertising Commissions Rent Utilities Wages Payments of Current Month Purchase (+) Payment of Purchase from Month B4 Curr. Mnt (+) Payment of Exepenses in Month incurred in Current Months (=) Cash Disbursemetn for the month Jun 33,000.00 10,500.00 9,900.00 33,600.00 $504,000.00 600.00 150.00 180.00 570.00 $2,850.00 180.00 180.00 $900.00 30% $5.00 October 3,000.00 12,000.00 $60,000.00 Jan Units 30% September 15,000.00 August September $4,800.00 $4,500.00 $8,400.00 $11,200.00 $6,400.00 $6,500.00 $19,600.00 $22,200.00 4.2 D Cash Budget Cash Collecting from Sales (-) Less Cash Disbursement for Inventory Purchases (-) Less Cash Disbursement for Other Expences (=) Change In Cash Balance During the period due to operations (+) Add Beginning Cash Balance (-) Less Desired Ending Cash Balance (=) Amount Needed to borrow July August Sales Inventory Purchases Operating Expenses Purchases of Equipment Payment of dividends $200,000 $80,000 $25,000 $50,000 $5,000 Inventory Purchases Disbursement Desired Cash 60% 30% 10% 100% Cash Collecting from Sales (-) Less Cash Disbursement for Inventory Purchases (-) Less Cash Disbursement for Other Expences (=) Change In Cash Balance During the period due to operations (+) Add Beginning Cash Balance (-) Less Desired Ending Cash Balance (=) Amount Needed to borrow $180,000 $140,000 $20,000 $60,000 $10,000 $80,000.00 $70,000.00 $140,000.00 $75,000.00 $10,000.00 A ugust $180,000.00 $108,000.00 $60,000.00 $$168,000.00 $80,000.00 $70,000.00 $18,000.00 $- September $230,000.00 $138,000.00 $54,000.00 $20,000.00 $212,000.00 $140,000.00 $75,000.00 $(3,000.00) $$10,000.00 $(13,000.00) $55,000.00 July $200,000.00 $120,000.00 $$$120,000.00 $$$$- September $230,000 $150,000 $40,000 $20,000 $15,000 $18,000.00 $150,000.00 $$69,000.00 $18,000.00 $87,000.00 $150,000.00 $$(63,000.00) $$(63,000.00) 4.2D Example Cash Collecting from Sales (-) Less Cash Disbursement for Inventory Purchases (-) Less Cash Disbursement for Other Expences (=) Change In Cash Balance During the period due to operations (+) Add Beginning Cash Balance (-) Less Desired Ending Cash Balance (=) Amount Needed to borrow Inventory Purchases Disbursement Desired Cash 70% 25% 5% 100% Cash Collecting from Sales (-) Less Cash Disbursement for Inventory Purchases (-) Less Cash Disbursement for Other Expences (=) Change In Cash Balance During the period due to operations (+) Add Beginning Cash Balance (-) Less Desired Ending Cash Balance (=) Amount Needed to borrow A pril May June $290,000.00 $310,000.00 $300,000.00 $140,000.00 $160,000.00 $130,000.00 $32,000.00 $38,000.00 $34,000.00 $72,000.00 $50,000.00 $120,000.00 $10,000.00 $8,000.00 $19,000.00 Sales Inventory Purchases Operating Expenses Purchases of Equipment Payment of dividends $114,000.00 $$$$- $140,000.00 $96,000.00 $160,000.00 $173,000.00 $20,000.00 $130,000.00 A pril May June $290,000.00 $310,000.00 $300,000.00 $203,000.00 $217,000.00 $210,000.00 $$72,500.00 $77,500.00 $$$14,500.00 $203,000.00 $289,500.00 $302,000.00 $160,000.00 $173,000.00 $(31,000.00) $$20,000.00 $(51,000.00) $$75,000.00 $15,500.00 $90,500.00 4.2 E Budgeting Cash Accounts Receivable Inventory Buildings and equipment T otal Assets $50,000 $25,000 Estimated $10,000 $125,000 $210,000 Total Accounts Payable Notes Payable Common Stock Retained Earnings T otal Liabilities + Owner's Equity $30,000 A cct/Rec $90,000 Purchases $40,000 $50,000 $210,000 Total Beginning Inventpry (+) Purchases (-) Ending Inventory (=) Cost of Good Sold Budgeted Net Income Sales (-) Cost of Goods Sold (=) Gross Margin (-) Other Expenses (=) Net Income Correct Answer Sales March 60% 4 0% $$March 30% 70% $$- $10,000 Budgeted End Inv March $160,000.00 Ending Inventory $22,000.00 $148,000.00 Selling and Admin Expense Depreciation Interest On Note $300,000.00 Total Exp $148,000.00 $152,000.00 New Equipment $19,000.00 Borrorow (New Loan) $133,000.00 $137,200.00 A pril May June $300,000.00 $180,000.00 $$$120,000.00 $180,000.00 $120,000.00 $$$- A pril May June $160,000.00 $48,000.00 $$$112,000.00 $48,000.00 $112,000.00 $$$- A pril May June $22,000.00 $11,000.00 $3,000.00 $5,000.00 $19,000.00 Err:522 Err:522 Err:522 $5,000.00 $10,000.00 Example Cash Accounts Receivable Inventory Buildings and equipment T otal Assets $10,000 $40,000 $25,000 $240,000 $315,000 Total Sales Estimated Accounts Payable Notes Payable Common Stock Retained Earnings T otal Liabilities + Owner's Equity $63,000 $87,000 $50,000 $115,000 $315,000 Total A cct/Rec Purchases Beginning Inventpry (+) Purchases (-) Ending Inventory (=) Cost of Good Sold Budgeted Net Income Sales (-) Cost of Goods Sold (=) Gross Margin (-) Other Expenses (=) Net Income March Sales Estimated Accounts Payable Notes Payable Common Stock Retained Earnings T otal Liabilities + Owner's Equity $30,000 $90,000 $40,000 $50,000 $210,000 Total A cct/Rec Purchases Budgeted Net Income Sales (-) Cost of Goods Sold (=) Gross Margin (-) Other Expenses (=) Net Income A pril $$- $63,000 $87,000 $50,000 $115,000 $315,000 Total A cct/Rec Purchases June Err:522 Err:522 $10,000.00 $9,000.00 $10,000 Budgeted End Inv May $160,000.00 Ending Inventory $22,000.00 $148,000.00 Selling and Admin Expense Depreciation Interest On Note $300,000.00 Total Exp $148,000.00 $152,000.00 New Equipment $14,800.00 Borrorow (New Loan) $137,200.00 Accounts Payable Notes Payable Common Stock Retained Earnings T otal Liabilities + Owner's Equity $15,000.00 $5,000.00 $1,300.00 $21,300.00 Err:522 $- 30% 70% May $36,000.00 May Sales Estimated Budgeted Net Income $$$- $- $10,000 $40,000 $25,000 $240,000 $315,000 Total Sales (-) Cost of Goods Sold (=) Gross Margin (-) Other Expenses (=) Net Income A pril May June $120,000.00 $24,000.00 $$$96,000.00 $24,000.00 $96,000.00 May 60% 4 0% 4 .2F Budgeted Balance Sheet Example Cash Accounts Receivable Inventory Buildings and equipment T otal Assets Beginning Inventpry (+) Purchases (-) Ending Inventory (=) Cost of Good Sold $$$- $- $25,000 Budgeted End Inv March $120,000.00 Ending Inventory $36,000.00 $109,000.00 Selling and Admin Expense Depreciation Interest On Note $200,000.00 Total Exp $109,000.00 $91,000.00 New Equipment $21,300.00 Borrorow (New Loan) $69,700.00 $50,000 $25,000 $10,000 $125,000 $210,000 Total A pril May June $200,000.00 $80,000.00 $$$120,000.00 $80,000.00 $120,000.00 March 20% 80% 4 .2F Budgeted Balance Sheet Cash Accounts Receivable Inventory Buildings and equipment T otal Assets Beginning Inventpry (+) Purchases (-) Ending Inventory (=) Cost of Good Sold $- 4 0% 60% June July A ugust $300,000.00 $180,000.00 $$$120,000.00 $180,000.00 $120,000.00 $$$- June July A ugust $160,000.00 $48,000.00 $$$112,000.00 $48,000.00 $112,000.00 $$$- June July A ugust $22,000.00 $11,000.00 $3,000.00 $800.00 $14,800.00 Err:522 Err:522 $5,000.00 $10,000.00 March 4 0% 60% $$March 20% 80% $$- $25,000 Budgeted End Inv March $120,000.00 Ending Inventory $36,000.00 $109,000.00 Selling and Admin Expense Depreciation Interest On Note $200,000.00 Total Exp $109,000.00 $91,000.00 New Equipment $21,300.00 Borrorow (New Loan) $69,700.00 A pril May June $200,000.00 $80,000.00 $$$120,000.00 $80,000.00 $120,000.00 $$$- A pril May June $120,000.00 $24,000.00 $$$96,000.00 $24,000.00 $96,000.00 $$$- A pril May June $36,000.00 $15,000.00 $5,000.00 $1,300.00 $21,300.00 Err:522 Err:522 Err:522 $10,000.00 $9,000.00 4.2 Test 1 Q4 Cash Collecting from Sales (-) Less Cash Disbursement for Inventory Purchases (-) Less Cash Disbursement for Other Expences (=) Change In Cash Balance During the period due to operations (+) Add Beginning Cash Balance (-) Less Desired Ending Cash Balance (=) Amount Needed to borrow October Sales Inventory Purchases Operating Expenses Purchases of Equipment Payment of dividends $92,000 $69,000 $20,000 $10,000 $3,000 Inventory Purchases Disbursement Desired Cash Cash Collecting from Sales (-) Less Cash Disbursement for Inventory Purchases (-) Less Cash Disbursement for Other Expences (=) Change In Cash Balance During the period due to operations (+) Add Beginning Cash Balance (-) Less Desired Ending Cash Balance (=) Amount Needed to borrow $88,000.00 $70,400.00 $$$70,400.00 $10,000 $40,000 $25,000 $240,000 $315,000 Total Sales Estimated Accounts Payable Notes Payable Common Stock Retained Earnings T otal Liabilities + Owner's Equity $63,000 $87,000 $50,000 $115,000 $315,000 Total A cct/Rec Purchases Budgeted Net Income Sales (-) Cost of Goods Sold (=) Gross Margin (-) Other Expenses (=) Net Income October $92,000.00 $73,600.00 $13,200.00 $$86,800.00 $75,000.00 $42,000.00 $5,000.00 December $105,000.00 $84,000.00 $14,550.00 $4,600.00 $103,150.00 $75,000.00 $42,000.00 $(13,850.00) $$5,000.00 $(18,850.00) $18,800.00 4.2F Budgeted Balance Sheet Example Cash Accounts Receivable Inventory Buildings and equipment T otal Assets Beginning Inventpry (+) Purchases (-) Ending Inventory (=) Cost of Good Sold $69,000.00 $8,000.00 N ovember $97,000.00 $77,600.00 $13,800.00 $4,400.00 $95,800.00 $69,000.00 $8,000.00 $18,800.00 $- $13,000.00 Sept 80% 15% 5% 100% November December $97,000 $105,000 $75,000 $80,000 $25,000 $27,000 $5,000 $12,000 $3,000 $3,000 March 4 0% 60% $$March 20% 80% $25,000 Budgeted End Inv March $120,000.00 Ending Inventory $36,000.00 $109,000.00 Selling and Admin Expense Depreciation Interest On Note $200,000.00 Total Exp $109,000.00 $91,000.00 New Equipment $21,300.00 Borrorow (New Loan) $69,700.00 $$- $80,000.00 $$15,750.00 $4,850.00 $20,600.00 $80,000.00 $$(59,400.00) $$(59,400.00) A pril May June $200,000.00 $80,000.00 $$$120,000.00 $80,000.00 $120,000.00 $$$- A pril May June $120,000.00 $24,000.00 $$$96,000.00 $24,000.00 $96,000.00 $$$- A pril May June $36,000.00 Err:522 $15,000.00 $5,000.00 $1,300.00 $21,300.00 $10,000.00 $9,000.00 Err:522 Err:522 Midterm Q1 Sales Purchases of raw materials Direct labor Manufacturing overhead Administrative expenses Selling expenses Raw materials inventory, beginning Raw materials inventory, ending Work in process inventory, beginning Work in process inventory, ending Finished goods inventory, beginning Finished goods inventory, ending Midterm Q2 $950.00 $170.00 $210.00 $200.00 $180.00 $140.00 $70.00 $80.00 $30.00 $20.00 $100.00 $70.00 Schedule of Cost of Goods Manufactured statement. Midterm Q1 Direct Materials (DM) = Direct Labor (DL) = Overhead (OH) = Total Manufactured Cost = $160 $210 $200 $570 Beginning Raw Materials Inventory (+) Purchases Raw Materials Avail for Use (-) End Raw Materials Inv. (=) Raw Materials Used In Prod. $70 $170 $240 $80 $160 Sales Revenue (-) Cost of Goods Sold (Product Cost) (CGM) (=) Gross Margin (CGM) $950 $580 $370 Beginning Work in Progress Inventory (+) Current Month Manufactured Total Manufactured Cost (-) End Work In Progress (=) Cost of Goods (Manufactured) (CGM) $30 $570 $600 $20 $580 Sales Revenue (=) Cost of Goods Sold (CGM&S) (=) Gross Margin (-) Period Cost Selling Cost General and Admin Cost (=) Net Operating Cost/Income $950 $610 $340 $140 $180 $20 Beginning Finished Goods Inventory (+) Cost of Goods Manufactured Goods Available for Sale (-) End Finished Goods Inventory (=) Cost of Goods Sold (CGM&S) $100 $580 $680 $70 $610 (=) Cost of Goods Sold (CGM&S) (=) Gross Margin (=) Net Operating Income $610 $340 $20 Midterm Q3 S1: Units to Account For: Beginning WIP Inventory (+) Units Started (=) Units to Account For Units 275,000 60,000 335,000 Percentage Completed Direct Materials 65% Conversion (DL+OH) 45% Units (Step 1 & 2 Must Match) S: Units 280,000 55,000 335,000 Percentage Completed Direct Materials 75% Conversion (DL+OH) 65% Units (Step 1 & 2 Must Match) Account for Them Completed & Shipped Out W IP Ending Inventory (=) Units to Account For S3: Equivalent Units Completed & Shipped Out WIP Ending Inventory (=) Units to Account For Direct Materials 280,000 41,250 321,250 Conversion (DL+OH) 280,000 35,750 315,750 Mid-Term Q4 Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Manufacturing Overhead Variable Selling & Admin (=) Total Var Cost Contribution Margin Variable Costing w/o Var. Selling & Admin) (-) Fixed Cost Fixed Manufacturing Overhead Fixed Selling and Administrative (=) Total Fixed Cost (=) Net Income Today $924,000 Per Unit $4.20 Increase by 5% $970,200.00 $462,000.00 $- $$$311,850.00 $173,250.00 $$485,100.00 $485,100.00 $- $$$297,000.00 $165,000.00 $462,000.00 $462,000.00 $280,000.00 $82,000.00 $362,000 $100,000 $280,000.00 $82,000.00 $362,000 $123,100 Contribution Margin Ratio divided by Total Sales = CM Ratio Percent 50.00% Contribution Margin Ratio Per Unit Fixed cost (diveded by) Contribution Margin per Unit Breakeven Point Cost Per Unit Company Name Direct Materials Direct Labor Variable Manufacturing Overhead Fixed Manufacturing Overhead Variable Selling & Admin Fixed Selling and Administrative Units Produced Units in beginnning finished goods Units Sold Sales Rev Selling Price 362,000.00 $462,000.00 0.78 $0.78 $$$297,000.00 $280,000.00 $165,000.00 $82,000.00 220,000 per unit per unit per unit per month per unit per month per month 220,000 924,000 $4.20 per unit Total $336,000 Revenues (-) Vararible Cost Direct Materials Direct Labor Variable Manufacturing Overhead Variable Selling & Admin Per Unit $112 $13.00 $49.00 $6.00 $10.00 (=) Total Var Cost Contribution Margin Variable Costing w/o Var. Selling & Admin) (-) Fixed Cost Fixed Manufacturing Overhead Fixed Selling and Administrative (=) Total Fixed Cost (=) Net Income $234,000.00 $102,000.00 CM/Unit Percent $80,600.00 $15,000.00 $95,600 $6,400 Finding Net Operating Income Variable Style) Sales Less Variable Expenses Beginning Inventory $100.00 Var. COGS $204,000.00 Var. Selling & Admin $30,000.00 Contribution Margin Less Ending Inventory Fixed Manufacturing Overhead Fixed Selling and administrative Net Operating Income $78.00 $34.00 $68.00 30.36% $336,000.00 $234,000.00 $102,000.00 $80,600.00 $15,000.00 $6,400.00 Changes of the two Systems Variable Net Oper. Income $6,400.00 Absorbtion Net Oper. Income $(6,100.00) Difference $12,500.00 Company Name Direct Materials $13.00 Direct Labor $49.00 Variable Manufacturing Overhead $6.00 Fixed Manufacturing Overhead $80,600.00 Variable Selling & Admin $10.00 Fixed Selling and Administrative $15,000.00 Units Produced 2,600 Units in beginnning finished goods 100.00 Units Sold 3,000 Selling Price $112.00 per unit per unit per unit per month per unit per month per month per unit Finding Net Operating Income (Absorbtion Style) Sales $336,000.00 Less Variable Expenses Beginning Inventory $100.00 COGM $257,400.00 Goods Avail For Sale $257,500.00 Less Ending Inventory $(39,600.00) $297,100.00 Gross Margin $38,900.00 Selling and Admin Expenses $45,000.00 Net Operating Income $(6,100.00) A bsortion Cost - Per Unit Fixed Manufacturing Overhead Units Produced Absortion Cost - Per Unit Unit Product Cost Direct Materials Direct Labor Variable Manufacturing Overhead (+) Total Variable Cost (+) Absorbtion Cost (=) Unit Product Cost $80,600.00 2,600 $31.00 $13.00 $49.00 $6.00 $68.00 $31.00 $99.00 E 10.1 Correct Answer T otal 100 $ 365 $ 36,500 Hours C ost per dive Revenues (-) Vararible Cost Wages Supplies Equip Rental Misc Unit $ 38,325 Correct Answer Total 105 $ 13,125 $ 315 $ 3,360 $ 189 $ 125.00 $ 3.00 $ 32.00 $ 1.80 $ 16,989.00 $ 21,336.00 100% My Work Total 105 $ 365 $ 38,325 $ 13,125 $ 315 $ 3,360 $ 189 Percent M odule 5.1A1 Creating Budgets $ 16,989.00 $ 21,336.00 $ 161.80 Unit Percent C reating Budgets Answer Check Info providied: 100% $ 203 $ 125.00 $ 3.00 $ 32.00 $ 1.80 (=) Total Var Cost Contribution Marg in (-) Fixed Cost Salaries Equip Rental Insur M isc $ 16,180.00 $ 20,320.00 $ 161.80 $ 8,000 $ 1,800 $ 3,4 00 $ 630 $ 8,000 $ 1,800 $ 3,4 00 $ 630 $ 13,830.00 $6,490 $ 13,830.00 $7,506 $ 1,016 105% $ 21,336 $ 13,830 $ 7,506 Var Cost Fixed Cost T otal Cost $ 8,000 $ 1,800 $ 3,4 00 $ 630 (=) Total Fixed Cost (=) Net Income $5 $ 20,320 $ 16,180 $ 13,830 $ 30,010 $ 16,989 $ 13,830 $ 30,819 Cost per Unit $ 12,500.00 $ 300.00 $ 3,200.00 $ 180.00 $ 30,010 100.00 $ 300.10 $ 6,4 90 $ 30,819 105.00 $ 293.51 $ 13,830.00 $7,506 44% 44% $ 7,506 Expected Sales Standard Cost Standard Quantiry per Cake Inventory D esired Ending Inv. Sugar 10000 Whistles $5.00 lbs 0.1 lbs 100 lbs 500 lbs Sugar Required for Sales Volume Less Beginning Inventory Subtotal Plus Desired Ending Inventory Pounds Needed to Purchase Standard Cost Planned Sugar Expenditures 1000 lbs 100 lbs 900 lbs 500 lbs 14 00 lbs $5.00 $7,000.00 Sugar Required for Sales Volume Less Beginning Inventory Subtotal Plus Desired Ending Inventory Pounds Needed to Purchase Standard Cost Planned Sugar Expenditures 500 lbs 100 lbs 4 00 lbs 500 lbs 900 lbs $1.10 $990.00 Sugar Required for Sales Volume Less Beginning Inventory Subtotal Plus Desired Ending Inventory Pounds Needed to Purchase Standard Cost Planned Sugar Expenditures 5 00 lbs - lbs 5 00 lbs - lbs 5 00 lbs $12.00 $6,000.00 (+) Amt Needed to Meet Production (+) Desired Ending Inventory (=) Total Amount Need (-) Beginning Inventory (=) Amount to be Purchase E xample - Creating Budgets Info providied: Ch9 March 1000 500 1500 100 14 00 $ 5.00 $ 7,000.00 $ 8,000.00 Budg eted Production (+) Desired Raw Material Inv (=) Raw Material Need (-) Beginning Raw Material Inv (=Raw Material To be Purchased Times how many 5 .1 Module A - Answer 5 .1 Module B - Answer Expected Sales Standard Cost Standard Quantiry per Cake Inventory Desired Ending Inv. Sugar Labels lbs lbs lbs lbs lbs 1000 Cakes $1.10 lbs 0.5 lbs 100 lbs 500 lbs (+) Amt Needed to Meet Production (+) Desired Ending Inventory (=) Total Amount Need (-) Beginning Inventory (=) Amount to be Purchase M odule 5.1A2 Creating Budgets DL C reating Budgets Info providied: 5.1C2 5.1 C.1 Overhead Costs Indirect Labor Production Supervisors' Salaries Utilities Supplies Depreciation Equipment Maintenance Activity Level Variable Calc Variable Fixed Total OH Cost Budg et OH $5,000 + $ 0.15 per machine hour $10,000 $3,000 + $0.05 per machine hour $0.20 per machine hour $12,000 $0.10 per machine hour Fixed $ 5,000.00 $ 10,000.00 $ 3,000.00 $ 12,000.00 $ 30,000.00 $ 5,000 $ 2,500 $ 2,500 $ 30,000 $ 32,500 $ 6,000 $ 3,000 $ 3,000 $ 30,000 $ 33,000 $ 7,000 $ 3,500 $ 3,500 $ 30,000 $ 33,500 Overhead Costs Variable Overhead Costs: Indirect Labor (Variable Portion) Utilities (Variable Portion) Supplies E quipment Maintenance Total Variable Overhead Costs Cost Formula (per labor) Activity (in labor hours) 1,000 2,000 $ 3.00 $ 1.00 $ 2.00 $ 0.50 $ 6.50 $ 3,000.00 $ 1,000.00 $ 2,000.00 $ 500.00 $ 6,500 $ 6,000 2,000 4 ,000 1,000 $ 13,000 3,000 $ 9,000.00 $ 3,000.00 $ 6,000.00 $ 1,500.00 $ 19,500 Var $ 0.15 $ 0.05 $ 0.20 $ 0.10 $ 0.50 Fixed Overhad Costs: Production Supervisors Salaries D epreciation Indirect Labor (Fixed Portion) Utilities (Fixed Portion) Total Fixed Overhead Costs $ 9,500 $ 5,000 3,000 1,000 500 $ 9,500 $ 22,500 $ 29,000 10,000.00 Whistles $12.00 lbs 0.05 DLHRS 0 lbs 0 lbs (+) Amt Needed to Meet Production (+) Desired Ending Inventory (=) Total Amount Need (-) Beginning Inventory (=) Amount to be Purchase $ 9,500 $ 16,000 Expected Sales Standard Cost Standard Quantiry per Cake Inventory Desired Ending Inv. Sugar M odule 5.1B1Compute the Standard Cost E xample Write All Numbers in absolute form (positive) AQp*SP AQp*AP SQ*SP Given Answer Total Overhead Cost Pg 4 77 E11-2 Graphic Approach Price Unit $ 7.60 Kilograms 22500 Kilograms $ 8.00 Kilograms $ 21,000 Kilograms AP AQ SP SQ - Calc.. 0.6 8 $ 35,000 22500 $ 171,000 AQ*AP $171,000.00 Actual Result $171,000.00 Difference of Act vs Flex DM Price Variance $ 9,000.00 Fav T otal DM Variance AQ*SP $180,000.00 Flexible Budg et $180,000.00 SQ*SP $168,000.00 Standard $168,000.00 Difference in Flex vs Stand DM Qty Varience $ 12,000.00 $ 3,000.00 Un Favorable Use for Formula AP = AR Actual Qty Purch = AH SP = SR SQ - Calc.. SH Price Unit $11.6666667 3,000 D LH $12.00 D LH 0 Standard Quantiry per Cake Expected Sales - Un Favorable dm .6K dl voh foh Total DM Variance Price Actual Price Actual Qty Standrd Price - FOH App Rate Standard Qty - Calc.. AQ 3,000 Labor Price Unit $ 10.00 hours 960 hours $ 9.75 hours 1,000 hours Planned Production Actual Production AQ*SP Flexible Budg et $9,360.00 SQ*SP Standard $9,750.00 Difference in Flex vs Stand DM Qty Varience Neg = Fav -$390.00 Pos = Unfav Neg = Favorable Pos = Unfavorable Pos = Favorable Neg = Unfavable Total DM Variance -$150.00 SP) $ 12.00 SP $12.00 Budg eted and Actual Information 5 00 7 00 (AQ$3,000.00 3,000 $35,000.00 4 ,4 00 DL Hours Used Actual DL Cost SQ) $0.00 Budgeted OH B udgeted Activity TOTAL $36,000.00 Neg = Favorable Pos = Unfav #DIV/0! DLH (denominator) Direct Material V arience ($1,000.00) Price Actual Qty Purchased 3,000 Per Unit Cost of DM $11.6666667 Materials Purchased 3,000 Actual Qty Purchased X (Actual Price -Standard Price) (*) (Actula Price (-) Standard Price) $ 11.67 $ 12.00 Total Cost of Materials Purchased $ 35,000.00 Yards Yards 360 $3,060.00 hours M odule 5.1B2 Compute the Standard Cost B 2 Problem Write All Numbers in absolute form (positive) AQp*SP AQp*AP SQ*SP G iven Answer Pg 4 78 E11-4 Use for Formula Actual Price = AR Actual Qty Purch = AH Standard Price = SR Standard Quantity - Calc.. SH Graphic Approach Price Neg = Fav Pos = Unfav Neg = Favorable Pos = Unfav Units Units $ 9.75 AP = AR AQ = AH SP = SR SQ - Calc.. SH TOTAL - $1,000.00 #DIV/0! Materials Purchased Total Cost of Materials Purchased Materials Used Price Actual Rate Actual Hrs Stand Rate Standard Hour - Calc.. $35,000.00 (AP$ 11.67 Standand Price and Quanities 6 Yards per unit $12.00 a Yard 0.5 DL Hrs per Unit $9.00 per DL Hr Materials Graphic Approach AQ*AP Actual Result $9,600.00 Difference of Act vs Flex DM Price Variance - $24 0.00 Standard $0.00 Difference in Flex vs Stand Type of Variance $36,000.00 Unfavor Neg = Favorable Pos = Unfavorable Unit 0.00 FOH App Rate Pg 4 78 E11-3 Flexible Budg et $36,000.00 Pos = Favorable Neg = Unfavable 8 K K HELMET K AP = AR AQ = AH SP = SR SQ - Calc.. SH Actual Result $35,000.00 Difference of Act vs Flex FOH Budg et Variance $1,000.00 Favor Unit $ 3.20 hours 2300 hours $ 3.25 hours 2,4 00 hours 120000 items 0.02 DLH AQ*AP Given Answer Actual Result $ 7,360.00 Difference of Act vs Flex VOH Rate Variance $ 115.00 Favor AQ*SP SQ*SP Flexible Budg et $7,4 75.00 Total DM Variance Standard $7,800.00 Difference in Flex vs Stand VOH Eff. Varience Neg = Fav -$325.00 Pos = Unfav Favor Neg = Favorable Pos = Unfavorable -$440.00 Unit Actual Result $175,000.00 Difference of Act vs Flex FOH Budg et Variance $ 5,000.00 Favor $9.7222222 18,000 D LH $10.00 D LH $4 4 ,000.00 Standard Quantiry Expected Sales - $7,360.00 Pos = Favorable Neg = Unfavable Price Flexible Budg et $180,000.00 Total DM Variance Price Actual Price Actual Qty Standrd Price - FOH App Rate Standard Qty - Calc.. Standard $4 4 0,000.00 Difference in Flex vs Stand Type of Variance -$260,000.00 Unfavor Neg = Favorable Pos = Unfavorable Pos = Favorable Neg = Unfavable -$265,000.00 Neg = Fav Pos = Unfav Unit 0.00 AQ (AP$ 9.72 SP) $ 10.00 (AQ- 18,000 TOTAL - $5,000.00 S Q) $ 20,000.00 Neg = Favorable Pos = Unfav #DIV/0! SP $10.00 18,000 TOTAL - $20,000.00 Neg = Favorable Pos = Unfav Price Actual Price Actual Qty Standrd Price Standard Qty - Calc.. $ 3.20 2300 $ 3.35 D LH DLH FOH App Rate AQ (AP- SP) 2300 120000 items 0.02 DLH 3.2 SP (AQ3.25 3.25 SQ) 2300 24 00 TOTAL -$115.00 TOTAL -$325.00 Neg = Favorable Pos = Unfav Standand Price and Quanities 2 Yards per unit $ 10.00 a Yard 0.25 DL Hrs per Unit $ 11.00 per DL Hr Materials Labor Price Actual Rate Actual Hrs Stand Rate Standard Hour - Calc.. 2300 Planned Production Actual Production 11A-2 Fixed OH App Rate Price AP = AR AQ = AH SP = SR SQ - Calc.. SH Unit $ 9.4 1 hours 27000 hours $ 10.00 hours 26,000 hours Write All Numbers in absolute form (positive) AQ*AP AQ*SP Given Answer $254 ,000.00 250000 Actual Result Flexible Budg et $ 254 ,000.00 $250,000.00 Difference of Act vs Flex VOH Rate Variance Pos = Favorable - $4 ,000.00 Neg = Unfavable Unfavorable Total DM Variance $ 9.4 1 27000 $ 10.00 $ 26,000 D LH DLH -$6,000.00 Standard $260,000.00 Difference in Flex vs Stand VOH Eff. Varience Neg = Fav -$10,000.00 Pos = Unfav Favor Neg = Favorable Pos = Unfavorable Price Unit $ 4 .50 1550 D LH $ 5.00 D LH 1500 1000 1.5 Price Actual Price Actual Qty Standrd Price - FOH App Rate S tandard Qty - Calc.. SP) $10.00 TOTAL -$16,011.00 (AQ$27,000.00 SQ) $26,000.00 TOTAL $10,000.00 Price Unit $11.6666667 3,000 D LH $12.00 D LH 0 $35,000.00 Use for Formula AP = AR AQp = AH SP = SR SQ - Calc.. SH Price Unit $ 4 .50 1550 D LH $ 5.00 D LH 1500 AQ (AP$ 11.67 SP) $ 12.00 (AQ- 3,000 1000 1.5 SP $12.00 S Q) $ 4 ,200.00 3,000 FOH App Rate Materials Neg = Favorable Pos = Unfavorable Labor TOTAL -$775.00 Neg = Favorable Pos = Unfav Planned Production Actual Production (AQ$1,550.00 SQ) $1,500.00 TOTAL $250.00 Neg = Favorable Pos = Unfav M aterials Purchased Total Cost of Materials Purchased Materials Used #DIV/0! DLH (denominator) Budg eted and Actual Information 5 00 7 00 Units Units Direct Material Varience Total DM Variance AQ $1,550.00 -$525.00 SP) $5.00 SP $5.00 (AQ$1,550.00 SQ) $1,500.00 FOH App Rate Type of Variance $250.00 Unfavor (AP$4 .50 Budgeted OH Budgeted Activity Standard Price X (Actual Quanity Used - Standand Quanty (-) Standard Price) Actual Quantity Used Standard Quanity $ 12.00 4 ,4 00 $ 4 ,200.00 Neg = Favorable DM Per Unit (*) Material Used 6 4 ,4 00 Quanty Price Unit #DIV/0! D LH D LH 0 Write All Numbers in absolute form (positive) AQp*AP Given Answer Actual Result #DIV/0! Difference of Act vs Flex FOH Budg et Variance #DIV/0! Favor Price Unit $9.7222222 18,000 D LH $10.00 D LH $20,000.00 TOTAL -$775.00 Standard Quantiry Expected Sales - Total DM Variance Price Actual Price Actual Qty Standrd Price - FOH App Rate Standard Qty - Calc.. T ype of Variance $0.00 Unfavor #DIV/0! SQ*SP Standard $0.00 Difference in Flex vs Stand Type of Variance Neg = Fav $0.00 Pos = Unfav Unfavor Neg = Favorable Pos = Unfavorable Unit #DIV/0! #DIV/0! $ 1,500 AQ $0.00 (AP#DIV/0! SP) $0.00 TOTAL #DIV/0! Neg = Favorable Pos = Unfav SP $ 0.00 (AQ$0.00 SQ) $0.00 TOTAL $0.00 Neg = Favorable Pos = Unfav FOH App Rate Budgeted OH B udgeted Activity #DIV/0! DLH (denominator) SQ*SP Standard Price and Quantities Materials Labor Variable Overhead Application Rate Budg eted and Actual Information Planned Production Actual Production AQ Materials Purchased Total Cost of Materials Purchased Materials Used 700 units 1,000 units 3,000 pounds $118,000 3,800 pounds DL Hours Used DL Hours Budgeted for Period Actual DL Cost (AQ- SP $10.00 Budg eted and Actual Information 8 ,000 10,000 M aterials Purchased Total Cost of Materials Purchased M aterials Used SP) $ 10.00 TOTAL - $5,000.00 Neg = Fav Pos = Unfav S Q) $ 20,000.00 Neg = Favorable Pos = Unfav #DIV/0! 18,000 Budgeted OH Budgeted Activity Units Units Direct Material Varience 18,000 $175,000.00 22,000 hours Yards Neg = Favorable Pos = Unfav #DIV/0! DLH Standard Price X (Actual Quanity Used - Standand Quanty (-) Standard Price) Actual Quantity Used Standard Quanity $ 10.00 22,000 $ 20,000.00 Neg = Favorable DM Per Unit Actual Production 2 10,000 Quanty $20,000.00 Pos = Unfav Standard Quantiy $20,000.00 Yards 2,4 00 $27,000.00 DL Hours Used Actual DL Cost TOTAL - $20,000.00 (denominator) Actual Qty Purchased X (Actual Price -Standard Price) Actual Qty Purchased (*) (Actula Price (-) Standard Price) 18,000 $ 9.72 $ 10.00 Neg = Favorable Materials Purchased T otal Cost of Materials Purchased 18,000 $ 175,000.00 D irect Material Price V arience -$5,000.00 Pos = Unfav Per Unit Cost of DM $9.7222222 Direct Labor Rate Varience DL Hours Used 2,4 00 Neg = Favorable D L Hours Used $ 2,4 00.00 $600.00 Pos = Unfav Actual DL Cost $11.25 1,550 hours 1,600 hours $19,375 Total Variable Manufacturing Overhead Actual Fixed Overhead Total Budgeted Fixed Overhead Planned Production Actual Production -$25,000.00 (AP$ 9.72 18,000 Standand Price and Quanities 2 Yards per unit $10.00 a Yard 0.25 DL Hrs per Unit $ 11.00 per DL Hr Labor 4 pounds per unit $4 0.00 per pound 1.5 DL hours per unit $12.00 per DL hour $5.00 per DL hour Standard $200,000.00 Difference in Flex vs Stand Type of Variance -$20,000.00 Unfavor Neg = Favorable Pos = Unfavorable Unit 0.00 Neg = Favorable Pos = Unfav AQp*SP Flexible Budg et $0.00 Flexible Budg et $180,000.00 Pos = Favorable Neg = Unfavable Total DM Variance Actual Price Actual Qty Standrd Price - FOH App Rate Standard Qty - Calc.. Neg = Favorable Pos = Unfav TOTAL $250.00 Actual Result $175,000.00 Difference of Act vs Flex FOH Budg et Variance $ 5,000.00 Favor #DIV/0! DLH (denominator) Pos = Favorable Neg = Unfavable Write All Numbers in absolute form (positive) AQp*SP AQp*AP Materials Use for Formula AP = AR AQp = AH SP = SR S Q - Calc.. SH Neg = Favorable Pos = Unfav #DIV/0! DLH Given Answer Use for Formula Actual Price = AR Actual Qty Purch = AH Standard Price = SR Standard Quantity - Calc.. SH FOH App Rate M odule 5.1B7 TOTAL - $14 ,4 00.00 (denominator) hours Yards SQ*SP Standard $7,500.00 Difference in Flex vs Stand Type of Variance Neg = Fav $250.00 Pos = Unfav Unfavor Neg = Favorable Pos = Unfavorable Unit 4 .50 27000 #DIV/0! $ 26,000 Neg = Favorable Pos = Unfav Actual Qty Purchased X (Actual Price -Standard Price) Actual Qty Purchased (*) (Actula Price (-) Standard Price) 3,000 $ 11.67 $ 12.00 Neg = Favorable Materials Purchased T otal Cost of Materials Purchased 3,000 $ 35,000.00 $2,4 00.00 Pos = Unfav Standard Quantiy $26,4 00.00 Yards 360 $3,060.00 DL Hours Used Actual DL Cost Budgeted OH Budgeted Activity D irect Material Price V arience -$1,000.00 Pos = Unfav Per Unit Cost of DM $11.6666667 3,000 $35,000.00 4 ,4 00 Price Price Actual Price Actual Qty Standrd Price - FOH App Rate Standard Qty - Calc.. TOTAL - $1,000.00 #DIV/0! Standand Price and Quanities 6 Yards per unit $12.00 a Yard 0.5 DL Hrs per Unit $9.00 per DL Hr SP) $5.00 Write All Numbers in absolute form (positive) AQp*AP AQp*SP Given Answer $6,975.00 Actual Result Flexible Budg et $ 6,975.00 $7,750.00 Difference of Act vs Flex T ype of Variance Pos = Favorable $775.00 Neg = Unfavable Favor Neg = Fav Pos = Unfav Unit 0.00 M odule 5.1B3 Compute the Standard Cost B 3 Problem Module 5.1B6 SQ*SP Standard $0.00 Difference in Flex vs Stand Type of Variance $36,000.00 Unfavor Neg = Favorable Pos = Unfavorable SQ*SP Standard $7,500.00 Difference in Flex vs Stand Type of Variance Neg = Fav $250.00 Pos = Unfav -$525.00 Budgeted OH Budgeted Activity Flexible Budg et $36,000.00 Pos = Favorable Neg = Unfavable Total DM Variance Price Actual Price Actual Qty Standrd Price - FOH App Rate Standard Qty - Calc.. (AP$4 .50 FOH App Rate Write All Numbers in absolute form (positive) AQp*SP Actual Result $35,000.00 Difference of Act vs Flex FOH Budg et Variance $1,000.00 Favor Standard Quantiry Expected Sales - SP $5.00 Type of Variance $ 775.00 Favor Standard Price X (Actual Quanity Used - Standand Quanty (-) Standard Price) Actual Quantity Used Standard Quanity $ 10.00 22,000 $ 20,000.00 Neg = Favorable DM Per Unit (*) Material Used 2 22,000 Quanty hours AQp*AP AQ $1,550.00 Total DM Variance Direct Material Varience $20,000.00 Pos = Unfav Standard Quantiy $4 4 ,000.00 Yards Given Answer Unit 4 .50 27000 #DIV/0! $ 26,000 Units Units Actual Qty Purchased X (Actual Price -Standard Price) Actual Qty Purchased (*) (Actula Price (-) Standard Price) 18,000 $ 9.72 $ 10.00 Neg = Favorable Materials Purchased T otal Cost of Materials Purchased 18,000 $ 175,000.00 B 2 Problem Example $250,000.00 $10.00 DLH $25,000.00 (denominator) Write All Numbers in absolute form (positive) AQp*AP AQp*SP Given Answer $6,975.00 Actual Result Flexible Budg et $ 6,975.00 $7,750.00 Difference of Act vs Flex T ype of Variance Pos = Favorable $775.00 Neg = Unfavable Favor #DIV/0! DLH (denominator) D irect Material Price V arience -$5,000.00 Pos = Unfav Per Unit Cost of DM $9.7222222 Yards 2,4 00 $27,000.00 Use for Formula Actual Price = AR Actual Qty Purch = AH Standard Price = SR S tandard Quantity - Calc.. SH Neg = Favorable Pos = Unfav Budgeted OH Budgeted Activity 18,000 $175,000.00 22,000 DL Hours Used Actual DL Cost Neg = Favorable Pos = Unfav FOH App Rate Use for Formula AP = AR AQp = AH SP = SR SQ - Calc.. SH (AP$9.4 1 SP $10.00 Module 5.1B5 AQ $ 27,000.00 Budg eted and Actual Information 8 ,000 10,000 M aterials Purchased Total Cost of Materials Purchased Materials Used SQ*SP Price Actual Price Actual Qty Standrd Price - FOH App Rate Standard Qty - Calc.. Budgeted OH Budgeted Activity Neg = Favorable Pos = Unfav Actual Quantity DL Hours X (Actual Rate -Standard Rate Actual DL Cost S tandard Rate 11.25 $ 11.00 $6,975 $10,000 $8,000 B 3 Problem Example Actual DL Cost 27,000 Write All Numbers in absolute form (positive) AQp*SP AQp*AP SQ*SP Given Answer Use for Formula Actual Price = AR Actual Qty Purch = AH Standard Price = SR Standard Quantity - Calc.. SH Price Unit $11.6666667 3,000 D LH $12.00 D LH $4 ,200.00 Actual Result $35,000.00 Difference of Act vs Flex FOH Budg et Variance $ 1,000.00 Favor Standard Quantiry Expected Sales - Total DM Variance Price Actual Price Actual Qty Standrd Price - FOH App Rate Standard Qty - Calc.. AQ (AP$ 11.67 3,000 SP) $ 12.00 TOTAL - $1,000.00 Neg = Fav Pos = Unfav Neg = Favorable Pos = Unfav #DIV/0! SP $12.00 (AQ- Budg eted and Actual Information 5 00 7 00 M aterials Purchased Total Cost of Materials Purchased M aterials Used Budgeted OH Budgeted Activity Units Units Direct Material Varience hours Yards Neg = Favorable Pos = Unfav #DIV/0! DLH Standard Price X (Actual Quanity Used - Standand Quanty (-) Standard Price) Actual Quantity Used Standard Quanity $ 12.00 4 ,4 00 $ 4 ,200.00 Neg = Favorable DM Per Unit Actual Production 6 7 00 Quanty $2,4 00.00 Pos = Unfav Standard Quantiy $4 ,200.00 Yards 360 $3,060.00 TOTAL - $14 ,4 00.00 (denominator) Actual Qty Purchased X (Actual Price -Standard Price) Actual Qty Purchased (*) (Actula Price (-) Standard Price) 3,000 $ 11.67 $ 12.00 Neg = Favorable Materials Purchased T otal Cost of Materials Purchased 3,000 $ 35,000.00 D irect Material Price V arience -$1,000.00 Pos = Unfav Per Unit Cost of DM $11.6666667 3,000 $35,000.00 4 ,4 00 D L Hours Used Actual DL Cost S Q) $ 4 ,200.00 3,000 FOH App Rate Labor Standard $50,4 00.00 Difference in Flex vs Stand Type of Variance -$14 ,4 00.00 Unfavor Neg = Favorable Pos = Unfavorable -$15,400.00 Unit 0.00 Standand Price and Quanities 6 Yards per unit $12.00 a Yard 0.5 DL Hrs per Unit $ 9.00 per DL Hr Materials Planned Production Actual Production Flexible Budg et $36,000.00 Pos = Favorable Neg = Unfavable Direct Labor Rate Varience DL Hours Used 360 Neg = Favorable D L Hours Used $ 360.00 ($180.00) Pos = Unfav Actual DL Cost $8.50 M odule 5.1B4 Compute the Standard Cost B 4 Problem Actual Quantity DL Hours X (Actual Rate -Standard Rate Actual DL Cost S tandard Rate 8 .50 $ 9.00 Actual DL Cost 3,060 Write All Numbers in absolute form (positive) AQp*SP AQp*AP SQ*SP Given Answer Use for Formula Actual Price = AR Actual Qty Purch = AH Standard Price = SR Standard Quantity - Calc.. SH Price Unit $9.7222222 18,000 D LH $10.00 D LH $20,000.00 Actual Result $175,000.00 Difference of Act vs Flex FOH Budg et Variance $ 5,000.00 Favor Standard Quantiry Expected Sales - Total DM Variance Price Actual Price Actual Qty Standrd Price - FOH App Rate Standard Qty - Calc.. AQ Labor SP) $ 10.00 (AQ- TOTAL - $5,000.00 Neg = Fav Pos = Unfav S Q) $ 20,000.00 Neg = Favorable Pos = Unfav #DIV/0! SP $10.00 Budg eted and Actual Information 8 ,000 10,000 M aterials Purchased Total Cost of Materials Purchased M aterials Used -$25,000.00 (AP$ 9.72 18,000 18,000 Standand Price and Quanities 2 Yards per unit $10.00 a Yard 0.25 DL Hrs per Unit $ 11.00 per DL Hr Materials Standard $200,000.00 Difference in Flex vs Stand Type of Variance -$20,000.00 Unfavor Neg = Favorable Pos = Unfavorable Unit 0.00 FOH App Rate Planned Production Actual Production Flexible Budg et $180,000.00 Pos = Favorable Neg = Unfavable Units Units Direct Material Varience 18,000 $175,000.00 22,000 hours Yards TOTAL - $20,000.00 Neg = Favorable Pos = Unfav #DIV/0! DLH (denominator) Actual Qty Purchased X (Actual Price -Standard Price) Actual Qty Purchased (*) (Actula Price (-) Standard Price) 18,000 $ 9.72 $ 10.00 Neg = Favorable Materials Purchased T otal Cost of Materials Purchased 18,000 $ 175,000.00 Standard Price X (Actual Quanity Used - Standand Quanty (-) Standard Price) Actual Quantity Used Standard Quanity $ 10.00 22,000 $ 20,000.00 Neg = Favorable DM Per Unit Actual Production 2 10,000 Quanty $20,000.00 Pos = Unfav Standard Quantiy $20,000.00 Yards 2,4 00 $27,000.00 D L Hours Used Actual DL Cost Budgeted OH Budgeted Activity D irect Material Price V arience -$5,000.00 Pos = Unfav Per Unit Cost of DM $9.7222222 Direct Labor Rate Varience DL Hours Used 2,4 00 Neg = Favorable D L Hours Used $ 2,4 00.00 $600.00 Pos = Unfav Actual DL Cost $11.25 Actual Quantity DL Hours X (Actual Rate -Standard Rate Actual DL Cost S tandard Rate 11.25 $ 11.00 Actual DL Cost 27,000 S tandard Price per DL Hour X (Actual DL Hours - Standand DL Hours) $$ Per DL Hr DL Hours Used Standard DL Hours $ 11.00 2,4 00.00 $ 2,500.00 Neg = Favorable DL Hrs per Unit Actual Production $ 0.25 10,000 Direct Labor Effciency Varience ($1,100.00) Pos = Unfav Standard DL Hours $2,500.00 B 4 Problem Example Write All Numbers in absolute form (positive) AQp*SP AQp*AP SQ*SP Given Answer Use for Formula Actual Price = AR Actual Qty Purch = AH Standard Price = SR Standard Quantity - Calc.. SH Price Unit $11.6666667 3,000 D LH $12.00 D LH $4 ,200.00 Actual Result $35,000.00 Difference of Act vs Flex FOH Budg et Variance $ 1,000.00 Favor Standard Quantiry Expected Sales - Total DM Variance Price Actual Price Actual Qty Standrd Price - FOH App Rate Standard Qty - Calc.. -$15,400.00 AQ (AP$ 11.67 3,000 SP $12.00 Budg eted and Actual Information 5 00 7 00 M aterials Purchased Total Cost of Materials Purchased M aterials Used SP) $ 12.00 (AQ- Budgeted OH Budgeted Activity Units Units Direct Material Varience hours Yards Standard Price X (Actual Quanity Used - Standand Quanty (-) Standard Price) Actual Quantity Used Standard Quanity $ 12.00 4 ,4 00 $ 4 ,200.00 Neg = Favorable DM Per Unit Actual Production 6 7 00 Quanty Actual Quantity DL Hours X (Actual Rate -Standard Rate DL Hours Used Actual DL Cost S tandard Rate 360 8 .50 $ 9.00 Neg = Favorable D L Hours Used Actual DL Cost $ 360.00 3,060 S tandard Price per DL Hour X (Actual DL Hours - Standand DL Hours) $$ Per DL Hr DL Hours Used Standard DL Hours $ 9.00 360.00 $ 350.00 Neg = Favorable DL Hrs per Unit Actual Production $ 0.50 7 00 Direct Labor Effciency Varience $90.00 Pos = Unfav Standard DL Hours $350.00 M odule 5.1B5 Compute the Standard Cost B 5 Problem Write All Numbers in absolute form (positive) AQp*SP AQp*AP Given Answer Flexible Budg et $4 0,000.00 Standard $160,000.00 Difference in Flex vs Stand Type of Variance -$120,000.00 Unfavor Neg = Favorable Pos = Unfavorable Pos = Favorable Neg = Unfavable Total DM Variance Price Actual Price Actual Qty Standrd Price - FOH App Rate Standard Qty - Calc.. SQ*SP $6,975.00 Actual Result $39,333.33 Difference of Act vs Flex FOH Budg et Variance $ 666.67 Favor Standard Quantiry Expected Sales - Neg = Favorable Pos = Unfav #DIV/0! DLH Direct Labor Rate Varience Price Unit $39.3333333 1,000 D LH $4 0.00 D LH $4 ,000.00 TOTAL - $14 ,4 00.00 (denominator) $2,4 00.00 Pos = Unfav Standard Quantiy $4 ,200.00 Yards 360 $3,060.00 -$120,666.67 Neg = Fav Pos = Unfav Unit 6.98 AQ (AP$ 39.33 1,000 SP) $ 4 0.00 TOTAL - $666.67 Neg = Favorable Pos = Unfav #DIV/0! SP $4 0.00 (AQ- Budg eted and Actual Information 7 00.00 1,000.00 3,000.00 $118,000.00 3,800.00 Machine Hours Used M achine Hours Budgeted for Period DL Hours Used Actual DL Cost D L Hours Budgeted for Period Budgeted OH Budgeted Activity D irect Material Price V arience -$2,000.00 Pos = Unfav Per Unit Cost of DM $39.3333333 Direct Material Varience Units Units Quanty ($8,000.00) Pos = Unfav Standard Quantiy $4 ,000.00 pounds pounds Direct Labor Rate Varience Machine Hours Machine Hours $1,550.00 Hours $19,375.00 $1,600.00 Hours $10,000.00 Total Variable Manafacturing Overhead Actual Fixed Manufacturing OH Total Budgeted Fixed Overhead Actual Variable Manufacturing OH S Q) $ 4 ,000.00 1,000 FOH App Rate Standand Price and Quanities $ 4 .00 pounds per unit $4 0.00 per pound L abor 1.50 D L Hrs per Unit $12.00 per DL Hr Machine Hours Hours per unit Variable Overhead Application $5.00 per DL Hr Materials M aterials Purchased T otal Cost of Materials Purchased M aterials Used Neg = Favorable Pos = Unfav Actual Qty Purchased X (Actual Price -Standard Price) Actual Qty Purchased (*) (Actula Price (-) Standard Price) 3,000 $ 11.67 $ 12.00 Neg = Favorable Materials Purchased T otal Cost of Materials Purchased 3,000 $ 35,000.00 ($180.00) Pos = Unfav Actual DL Cost $8.50 Planned Production Actual Production TOTAL - $1,000.00 S Q) $ 4 ,200.00 3,000 D irect Material Price V arience -$1,000.00 Pos = Unfav Per Unit Cost of DM $11.6666667 3,000 $35,000.00 4 ,4 00 D L Hours Used Actual DL Cost Use for Formula Actual Price = AR Actual Qty Purch = AH Standard Price = SR Standard Quantity - Calc.. SH Neg = Fav Pos = Unfav Unit 0.00 FOH App Rate Labor Standard $50,4 00.00 Difference in Flex vs Stand Type of Variance -$14 ,4 00.00 Unfavor Neg = Favorable Pos = Unfavorable #DIV/0! Standand Price and Quanities 6 Yards per unit $12.00 a Yard 0.5 DL Hrs per Unit $ 9.00 per DL Hr Materials Planned Production Actual Production Flexible Budg et $36,000.00 Pos = Favorable Neg = Unfavable $ 775.00 Pos = Unfav Actual DL Cost $12.50 Direct Labor Effciency Varience $600.00 Pos = Unfav Standard DL Hours $1,500.00 $6,975.00 Variable Overhead Price Variance $1,937.50 Pos = Unfav FOH App Rate B Problem Example TOTAL - $120,000.00 Standard Price X (Actual Quanity Used - Standand Quanty (-) Standard Price) Actual Quantity Used Standard Quanity $4 0.00 3,800 $ 4 ,000.00 Neg = Favorable DM Per Unit Actual Production 4 1,000 Actual Quantity DL Hours X (Actual Rate -Standard Rate DL Hours Used Actual DL Cost S tandard Rate 1,550 12.50 $ 12.00 Neg = Favorable D L Hours Used Actual DL Cost $ 1,550.00 19,375 S tandard Price per DL Hour X (Actual DL Hours - Standand DL Hours) $$ Per DL Hr DL Hours Used Standard DL Hours $ 12.00 1,550.00 $ 1,500.00 Neg = Favorable DL Hrs per Unit Actual Production $ 1.50 1,000 Actual Allocation Units * (Actual Rate-Standard Rate) Actual Allocation Units Actual Rate Standard Rate $ 1,550.00 $6.25 $ 5.00 Neg = Favorable Budgeted Variable OH $10,000.00 $6.25 B udgeted Allocation Activity Units $1,600.00 Write All Numbers in absolute form (positive) AQp*SP AQp*AP Neg = Favorable Pos = Unfav #DIV/0! DLH (denominator) Actual Qty Purchased X (Actual Price -Standard Price) Actual Qty Purchased (*) (Actula Price (-) Standard Price) 3,000 $ 39.33 $ 4 0.00 Neg = Favorable Materials Purchased T otal Cost of Materials Purchased 3,000 $ 118,000.00 SQ*SP Given Answer Use for Formula Actual Price = AR Actual Qty Purch = AH Standard Price = SR Standard Quantity - Calc.. SH Price Unit $19.6000000 5 ,000 D LH $20.00 D LH $4 ,500.00 Actual Result $98,000.00 Difference of Act vs Flex FOH Budg et Variance $ 2,000.00 Favor Standard Quantiry Expected Sales - Total DM Variance Price Actual Price Actual Qty Standrd Price - FOH App Rate S tandard Qty - Calc.. AQ $8,000.00 (AP$ 19.60 5 ,000 SP) $ 20.00 SP $20.00 Budg eted and Actual Information 1,000.00 9 00.00 M aterials Purchased T otal Cost of Materials Purchased M aterials Used 5 ,000.00 $98,000.00 4 ,800.00 Machine Hours Used M achine Hours Budgeted for Period DL Hours Used Actual DL Cost D L Hours Budgeted for Period D irect Material Price V arience -$2,000.00 Pos = Unfav Per Unit Cost of DM $19.6000000 Direct Material Varience Units Units Quanty $6,000.00 Pos = Unfav Standard Quantiy $4 ,500.00 pounds pounds Direct Labor Rate Varience 2,650.00 M achine Hours 2,800.00 M achine Hours $4 4 0.00 Hours $6,000.00 Hours ($600.00) Pos = Unfav Actual DL Cost $13.64 Direct Labor Effciency Varience ($150.00) Pos = Unfav Standard DL Hours $4 50.00 Variable Overhead Price Variance 609.5 Module 5.1B5 Price Unit $ 4 .50 1550 D LH $ 5.00 D LH 1500 Price Actual Price Actual Qty Standrd Price - FOH App Rate Standard Qty - Calc.. ($600.00) Pos = Unfav FOH App Rate Total DM Variance AQ $1,550.00 3,000 $118,000.00 3,800 Direct Material Varience hours Quanty Direct Labor Rate Varience $775.00 Pos = Unfav Actual DL Cost $12.50 Direct Labor Effciency Varience $600.00 Pos = Unfav Standard DL Hours $1,500.00 M odule 5.1B6 Unit $ 4 .50 1550 D LH $ 5.00 D LH 1500 Neg = Fav Pos = Unfav Neg = Favorable Pos = Unfavorable TOTAL -$775.00 TOTAL $250.00 Total DM Variance Neg = Favorable Pos = Unfav Neg = Favorable Pos = Unfav #DIV/0! DLH (denominator) Actual Qty Purchased X (Actual Price -Standard Price) Actual Qty Purchased (*) (Actula Price (-) Standard Price) 3,000 $ 39.33 $ 4 0.00 Neg = Favorable Materials Purchased T otal Cost of Materials Purchased 3,000 $ 118,000.00 Standard Price X (Actual Quanity Used - Standand Quanty (-) Standard Price) Actual Quantity Used Standard Quanity $4 0.00 3,800 $ 4 ,000.00 Neg = Favorable DM Per Unit Actual Production 4 1,000 DL Hours Used 1,550 Neg = Favorable D L Hours Used $ 1,550.00 Actual Quantity DL Hours X (Actual Rate -Standard Rate Actual DL Cost S tandard Rate 12.50 $ 12.00 Actual DL Cost 19,375 S tandard Price per DL Hour X (Actual DL Hours - Standand DL Hours) $$ Per DL Hr DL Hours Used Standard DL Hours $ 12.00 1,550.00 $ 1,500.00 Neg = Favorable DL Hrs per Unit Actual Production $ 1.50 1,000 SQ*SP Standard $7,500.00 Difference in Flex vs Stand Type of Variance $250.00 Unfavor Neg = Favorable Pos = Unfavorable -$525.00 Neg = Fav Pos = Unfav Unit 4 .50 27000 #DIV/0! $ 26,000 AQ $1,550.00 Price Unit #DIV/0! D LH D LH 0 SP) $5.00 SP $5.00 Module 5.1B7 (AP$4 .50 (AQ$1,550.00 SQ) $1,500.00 FOH App Rate Type of Variance $250.00 Unfavor Budgeted OH Budgeted Activity Write All Numbers in absolute form (positive) AQp*AP Given Answer Actual Result #DIV/0! Difference of Act vs Flex FOH Budg et Variance #DIV/0! Favor Total DM Variance Price Type of Variance $0.00 Unfavor SQ*SP Standard $7,500.00 Difference in Flex vs Stand Type of Variance $250.00 Write All Numbers in absolute form (positive) AQp*AP AQp*SP Given Answer $6,975.00 Actual Result Flexible Budg et $ 6,975.00 $7,750.00 Difference of Act vs Flex T ype of Variance Pos = Favorable $775.00 Neg = Unfavable Favor 1000 1.5 Price Actual Price Actual Qty Standrd Price - FOH App Rate Standard Qty - Calc.. Actual Allocation Units * (Actual Rate-Standard Rate) Actual Allocation Units Actual Rate Standard Rate $ 2,650.00 $ 3.773584 9 $ 4 .00 Neg = Favorable Budgeted Variable OH $10,000.00 $3.77 B udgeted Allocation Activity Units 2,650.00 (denominator) SQ) $1,500.00 ($8,000.00) Pos = Unfav Standard Quantiy $4 ,000.00 Yards $ 6,975.00 Price S tandard Price per DL Hour X (Actual DL Hours - Standand DL Hours) $$ Per DL Hr DL Hours Used Standard DL Hours $ 15.00 4 4 0.00 $ 4 50.00 Neg = Favorable DL Hrs per Unit Actual Production $ 0.50 9 00 Budgeted OH Budgeted Activity D irect Material Price V arience -$2,000.00 Pos = Unfav Per Unit Cost of DM $39.3333333 Yards 1,550 $19,375.00 1600 Hours Actual Variable Manufacturing OH Actual Quantity DL Hours X (Actual Rate -Standard Rate DL Hours Used Actual DL Cost S tandard Rate 440 13.64 $ 15.00 Neg = Favorable D L Hours Used Actual DL Cost $ 4 4 0.00 6 ,000 SP) $5.00 (AQ$1,550.00 FOH App Rate Standand Price and Quanities 4 Yards per unit $4 0.00 a Yard Labor 1.5 DL Hrs per Unit $ 12.00 per DL Hr Variable Overhead Application $5.00 per DL Hr Budg eted and Actual Information Planned Production 7 00 Units Actual Production 1,000 Units D L Hours Used Actual DL Cost DL Hours Budgeted for Period Standard Price X (Actual Quanity Used - Standand Quanty (-) Standard Price) Actual Quantity Used Standard Quanity $ 20.00 4 ,800 $ 4 ,500.00 Neg = Favorable DM Per Unit Actual Production 5 9 00 -$525.00 (AP$4 .50 SP $5.00 Type of Variance $775.00 Favor Actual Price Actual Qty Standrd Price - FOH App Rate Standard Qty - Calc.. Neg = Favorable Pos = Unfav Unit 4 .50 27000 #DIV/0! $ 26,000 Materials Use for Formula AP = AR AQp = AH SP = SR SQ - Calc.. SH TOTAL $ 10,000.00 Actual Qty Purchased X (Actual Price -Standard Price) Actual Qty Purchased (*) (Actula Price (-) Standard Price) 5 ,000 $ 19.60 $ 20.00 Neg = Favorable Materials Purchased T otal Cost of Materials Purchased 5 ,000 $ 98,000.00 Write All Numbers in absolute form (positive) AQp*AP AQp*SP Given Answer $6,975.00 Actual Result Flexible Budg et $ 6,975.00 $7,750.00 Difference of Act vs Flex T ype of Variance Pos = Favorable $775.00 Neg = Unfavable Favor 1000 1.5 Use for Formula AP = AR AQp = AH SP = SR SQ - Calc.. SH Neg = Fav Pos = Unfav Neg = Favorable Pos = Unfav S Q) $ 4 ,500.00 (AQ5 ,000 $10,000.00 $12,000.00 $14 ,000.00 Total Variable Manafacturing Overhead Actual Fixed Manufacturing OH Total Budgeted Fixed Overhead M aterials Purchased Total Cost of Materials Purchased M aterials Used TOTAL - $2,000.00 $3.77 Standand Price and Quanities $ 5.00 pounds per unit $20.00 per pound L abor 0 .50 D L Hrs per Unit $15.00 per DL Hr Machine Hours 3.00 H ours per unit Variable Overhead Application $4 .00 per DL Hr Use for Formula AP = AR AQp = AH SP = SR SQ - Calc.. SH Standard $90,000.00 Difference in Flex vs Stand Type of Variance $10,000.00 Unfavor Neg = Favorable Pos = Unfavorable Unit 0.00 Materials Planned Production Actual Production Flexible Budg et $100,000.00 Pos = Favorable Neg = Unfavable TOTAL -$775.00 TOTAL $250.00 Neg = Favorable Pos = Unfav Neg = Favorable Pos = Unfav #DIV/0! DLH (denominator) AQp*SP SQ*SP Flexible Budg et $0.00 Standard $0.00 Difference in Flex vs Stand Type of Variance $0.00 Unfavor Neg = Favorable Pos = Unfavorable Pos = Favorable Neg = Unfavable #DIV/0! Unit #DIV/0! #DIV/0! $ 1,500 AQ $0.00 (AP#DIV/0! SP) $0.00 SP $0.00 (AQ$0.00 SQ) $0.00 FOH App Rate Budgeted OH Budgeted Activity TOTAL #DIV/0! TOTAL $0.00 Neg = Favorable Pos = Unfav Neg = Favorable Pos = Unfav #DIV/0! DLH (denominator) Neg = Fav Pos = Unfav Module 5.1B7 Compute the Standard Cost B7 Problem Final Answers Use for Formula Actual Price = AR A ctual Qty Purch = AH Standard Price = SR Standard Quantity - Calc.. SH Actual Production DL Hrs per Unit Given Answer Price $$1,550.00 $5.00 $1,500.00 1,000.00 1.50 Use to Solve if not Given All Answers Actual Price Actual Qty Standrd Price - FOH App Rate Standard Qty - Calc.. Price - Unit SQ*SP Standard labor-hours allowed for the actual number of checks processed $0.00 A ctual Result $0.00 Difference of Act vs Flex FOH Budget Variance $7,750.00 Favor DLH DLH Budgeted labor-hours Actual labor-hours W rite All Numbers in absolute form (positive) AQp*SP AQp*AP Flexible Budget $7,750.00 Pos = Favorable Neg = Unfavable Total DM Variance -$7,500.00 Standard $7,500.00 Difference in Flex vs Stand Type of Variance Neg = Fav $250.00 Pos = Unfav Unfavor Neg = Favorable Pos = Unfavorable Overhead costs Variable overhead costs: Office supplies Staff coffee lounge Indirect labor Total variable overhead cost Unit AQ (AP$0.00 TOTAL -$5,000.00 SQ) $4,000.00 TOTAL -$15,000.00 Overhead costs Variable overhead costs: Office supplies Staff coffee lounge Indirect labor Total variable overhead cost Neg = Favorable Pos = Unfav (AQ- 1,000 SP) $5.00 Neg = Favorable Pos = Unfav #NAME? SP $5.00 1,000 865.00 860.00 880.00 Standard Rate (per Labor Hr) 0.15 0.05 3.25 3.45 Standard Rate (per Labor Hr) 0.15 0.05 3.25 3.45 Neg = Favorable Pos = Unfav (1) Given Actual Costs 2: Budget at Actual LH Budgeted Hours 146.00 124.00 2,790.00 3,060.00 2: Budget at Actual LH Materials Labor Machine Hours Variable Overhead Application Planned Production Actual Production Per Unit Cost of DM $39.3333333 Units Units 3,000.00 $118,000.00 3,800.00 Machine Hours Used Machine Hours Budgeted for Period DL Hours Used Actual DL Cost DL Hours Budgeted for Period Total Variable Manafacturing Overhead Actual Fixed Manufacturing OH Total Budgeted Fixed Overhead Actual Variable Manufacturing OH -$2,000.00 Pos = Unfav ($8,000.00) Pos = Unfav Standard Quantiy $4,000.00 pounds pounds A ctual Quantity DL Hours X (Actual Rate -Standard Rate DL Hours Used Actual DL Cost 1,550 12.50 Neg = Favorable DL Hours Used Actual DL Cost $1,550.00 19,375 Direct Labor Rate Varience Machine Hours Machine Hours $1,550.00 Hours $19,375.00 $16,000.00 Hours $6,975.00 $10,000.00 $8,000.00 $775.00 Pos = Unfav Actual DL Cost $12.50 5.1D Example Budgeted labor-hours A ctual labor-hours Standard labor-hours allowed for the actual number of checks processed Overhead costs Variable overhead costs: Office supplies Staff coffee lounge Indirect labor Total variable overhead cost Standard Rate $12.00 Standard Price per DL Hour X (Actual DL Hours - Standand DL Hours) $$ Per DL Hr DL Hours Used Standard DL Hours $12.00 1,550.00 $1,500.00 Direct Labor Effciency Varience $600.00 Pos = Unfav Neg = Favorable DL Hrs per Unit $1.50 Standard DL Hours $1,500.00 Actual Production 1,000 Actual Allocation Units * (Actual Rate-Standard Rate) Actual Allocation Units Actual Rate Standard Rate $1,550.00 $4.50 $5.00 Neg = Favorable Budgeted Variable OH $6,975.00 Budgeted Allocation Activity Units $1,550.00 (denominator) Variable Overhead Price Variance ($775.00) Pos = Unfav FOH App Rate Overhead costs Variable overhead costs: Office supplies Staff coffee lounge Indirect labor Total variable overhead cost $2,000.00 $4.50 Budgeted labor-hours A ctual labor-hours W rite All Numbers in absolute form (positive) AQp*SP Final Answers Use for Formula Actual Price = AR A ctual Qty Purch = AH Standard Price = SR Standard Quantity - Calc.. SH A ctual Production DL Hrs per Unit Given Answer Price $$440.00 $4.00 $450.00 900.00 0.50 Use to Solve if not Given All Answers Actual Price Actual Qty Standrd Price - FOH App Rate Standard Qty - Calc.. Price - $0.00 A ctual Result $0.00 Difference of Act vs Flex FOH Budget Variance $1,760.00 Favor DLH DLH Total DM Variance Flexible Budget $1,760.00 Pos = Favorable Neg = Unfavable -$1,800.00 Standard $1,800.00 Difference in Flex vs Stand Type of Variance Neg = Fav -$40.00 Pos = Unfav Unfavor Neg = Favorable Pos = Unfavorable Unit AQ (AP$0.00 SP) $4.00 TOTAL -$3,600.00 Neg = Favorable Pos = Unfav (AQ- 900 SP $4.00 Standand Price and Quanities $5.00 pounds per unit $20.00 per pound 0.50 DL Hrs per Unit $15.00 per DL Hr Labor Machine Hours Variable Overhead Application SQ) $4,500.00 TOTAL -$14,400.00 Neg = Favorable Pos = Unfav 900 Direct Material Price Varience -$2,000.00 Pos = Unfav Per Unit Cost of DM 3.00 Hours per unit $4.00 per DL Hr $19.6000000 Direct Material Quanty Varience Budgeted and Actual Information 1,000.00 900.00 Units Units Materials Purchased Total Cost of Materials Purchased Materials Used 5,000.00 $98,000.00 4,800.00 Machine Hours Used Machine Hours Budgeted for Period DL Hours Used Actual DL Cost DL Hours Budgeted for Period Total Variable Manafacturing Overhead Actual Fixed Manufacturing OH Total Budgeted Fixed Overhead Actual Variable Manufacturing OH 2,650.00 Machine Hours 2,800.00 Machine Hours $440.00 Hours $6,000.00 Hours $10,000.00 $12,000.00 $14,000.00 $6,000.00 Pos = Unfav Standard Quantiy $4,500.00 pounds pounds Direct Labor Rate Varience ($600.00) Pos = Unfav Actual DL Cost $13.64 Direct Labor Effciency Varience ($150.00) Pos = Unfav Standard DL Hours $450.00 Variable Overhead Price Variance $8,240.00 Pos = Unfav FOH App Rate Fixed Overhead Expense ( Budget Varience) ($2,000.00) Pos = Unfav Module 5.1D1 Analyze abd Report Overhead D1 Problem Budgeted labor-hours Actual labor-hours Standard labor-hours allowed for the actual number of checks processed Overhead costs Variable overhead costs: Office supplies Staff coffee lounge Indirect labor Total variable overhead cost SQ*SP #NAME? Materials Planned Production Actual Production Unit A ctual Qty Purchased X (Actual Price -Standard Price) A ctual Qty Purchased (*) (Actula Price (-) Standard Price) 5,000 $19.60 $20.00 Neg = Favorable Materials Purchased Total Cost of Materials Purchased 5,000 A ctual Quantity DL Hours X (Actual Rate -Standard Rate DL Hours Used Actual DL Cost 440 13.64 Neg = Favorable DL Hours Used Actual DL Cost $440.00 6,000 Standard Rate $15.00 Standard Price per DL Hour X (Actual DL Hours - Standand DL Hours) $$ Per DL Hr DL Hours Used Standard DL Hours $15.00 440.00 $450.00 Actual Allocation Units * (Actual Rate-Standard Rate) Actual Allocation Units Actual Rate Standard Rate $440.00 $22.73 $4.00 Neg = Favorable Budgeted Variable OH $10,000.00 $22.73 Budgeted Allocation Activity Units $440.00 (denominator) Write All Numbers in absolute form (positive) (1) Given Actual Costs 2: Budget at Actual LH Budgeted Hours 270.00 1,310.00 5,085.00 6,665.00 2: Budget at Actual LH (3) Budget At Allowed LH 21.00 65.00 105.00 191.00 U U U U (2-3) Effiency Variance (7.00) (35.00) (140.00) (182.00) F F F F (1-3 Total Variance (3) Budget At Allowed LH 256.00 1,280.00 5,120.00 6,656.00 14.00 30.00 (35.00) 9.00 U U F U Overhead costs Variable overhead costs: Office supplies Staff coffee lounge Indirect labor Total variable overhead cost Overhead costs Variable overhead costs: Office supplies Staff coffee lounge Indirect labor Total variable overhead cost Standard Rate (per Labor Hr) 0.15 0.05 3.25 3.45 Standard Rate (per Labor Hr) 0.15 0.05 3.25 3.45 Neg = Favorable Pos = Unfav (1) Given Actual Costs 2: Budget at Actual LH Budgeted Hours 146.00 124.00 2,790.00 3,060.00 2: Budget at Actual LH 1,280.00 Overhead costs Variable overhead costs: Office supplies Staff coffee lounge Indirect labor Total variable overhead cost Standard Rate (per Labor Hr) 0.20 1.00 4.00 5.20 Standard Rate (per Labor Hr) 0.20 1.00 4.00 5.20 2: Budget at Actual LH Budgeted Hours 270.00 1,310.00 5,085.00 6,665.00 2: Budget at Actual LH Variable overhead costs: Office supplies Staff coffee lounge Indirect labor Total variable overhead cost 0.20 1.00 4.00 5.20 F F F F (1-3 Total Variance 14.00 80.00 (70.00) 24.00 U U F U (1-2) Spending Varience 249.00 1,245.00 4,980.00 6,474.00 (3) Budget At Allowed LH 249.00 1,245.00 4,980.00 6,474.00 21.00 65.00 105.00 191.00 U U U U (2-3) Effiency Variance 256.00 1,280.00 5,120.00 6,656.00 (3) Budget At Allowed LH 1,280.00 Standard Rate (per Labor Hr) (3.00) (1.00) (65.00) (69.00) Pos = Unfav (1) Given Actual Costs 1,255.00 1,245.00 Overhead costs (2-3) Effiency Variance 132.00 44.00 2,860.00 3,036.00 270.00 1,310.00 5,085.00 6,665.00 Standard labor-hours allowed for the actual number of checks processed U U F U Neg = Favorable (1) Given Actual Costs 5.1D2 Example Budgeted labor-hours A ctual labor-hours 17.00 81.00 (5.00) 93.00 132.00 44.00 2,860.00 3,036.00 (3) Budget At Allowed LH 1,255.00 1,245.00 Overhead costs (3) Budget At Allowed LH 146.00 124.00 2,790.00 3,060.00 5.1D2 Example Budgeted labor-hours Actual labor-hours Variable overhead costs: Office supplies Staff coffee lounge Indirect labor Total variable overhead cost 129.00 43.00 2,795.00 2,967.00 129.00 43.00 2,795.00 2,967.00 (1) Given Actual Costs Overhead costs Variable overhead costs: Office supplies Staff coffee lounge Indirect labor Total variable overhead cost (1-2) Spending Varience (7.00) (35.00) (140.00) (182.00) F F F F (1-3 Total Variance 256.00 1,280.00 5,120.00 6,656.00 14.00 30.00 (35.00) 9.00 U U F U Neg = Favorable Pos = Unfav (1) Given Actual Costs 2: Budget at Actual LH Budgeted Hours 270.00 1,310.00 5,085.00 6,665.00 (1-2) Spending Varience 249.00 1,245.00 4,980.00 6,474.00 21.00 65.00 105.00 191.00 U U U U (2-3) 880 $0.15 0.05 3.25 $3.45 U U U F (1-2) Spending Varience 256.00 1,280.00 5,120.00 6,656.00 865 860 Standard Rate (per Labor Hr) 14.00 80.00 (70.00) 24.00 249.00 1,245.00 4,980.00 6,474.00 249.00 1,245.00 4,980.00 6,474.00 865.00 860.00 880.00 Actual Production 900 Actual Fixed Overhead - Budgeted Fixed Overhead Actual Fixed Overhead Budgeted Fixed Overhead $12,000.00 $14,000.00 Neg = Favorable (1-3 Total Variance 132.00 44.00 2,860.00 3,036.00 270.00 1,310.00 5,085.00 6,665.00 Standard labor-hours allowed for the actual number of checks processed $98,000.00 Standard Price X (Actual Quanity Used - Standand Quanty (-) Standard Price) Actual Quantity Used Standard Quanity $20.00 4,800 $4,500.00 Neg = Favorable DM Per Unit Actual Production 5 900 Neg = Favorable DL Hrs per Unit $0.50 U U U U Neg = Favorable Pos = Unfav (1) Given Actual Costs Variable overhead costs: Office supplies Staff coffee lounge Indirect labor Total variable overhead cost Standard labor-hours allowed for the actual number of checks processed AQp*AP 0.20 1.00 4.00 5.20 (3.00) (1.00) (65.00) (69.00) 5.1D2 Problem Neg = Favorable B7 Problem Example Standard Rate (per Labor Hr) Overhead costs Actual Fixed Overhead - Budgeted Fixed Overhead Actual Fixed Overhead Budgeted Fixed Overhead $10,000.00 $8,000.00 Fixed Overhead Expense ( Budget Varience) Pos = Unfav 0.20 1.00 4.00 5.20 U U F U (2-3) Effiency Variance (3) Budget At Allowed LH 1,255.00 1,245.00 1,280.00 Standard Rate (per Labor Hr) 17.00 81.00 (5.00) 93.00 132.00 44.00 2,860.00 3,036.00 146.00 124.00 2,790.00 3,060.00 Standard Price X (Actual Quanity Used - Standand Quanty (-) Standard Price) Actual Quantity Used Standard Quanity $40.00 3,800 $4,000.00 Neg = Favorable DM Per Unit Actual Production 4 1,000 Direct Material Quanty Varience Budgeted and Actual Information 700.00 1,000.00 Materials Purchased Total Cost of Materials Purchased Materials Used A ctual Qty Purchased X (Actual Price -Standard Price) A ctual Qty Purchased (*) (Actula Price (-) Standard Price) 3,000 $39.33 $40.00 Neg = Favorable Materials Purchased Total Cost of Materials Purchased 3,000 $118,000.00 Direct Material Price Varience (3) Budget At Allowed LH 129.00 43.00 2,795.00 2,967.00 (1) Given Actual Costs Standand Price and Quanities $4.00 pounds per unit $40.00 per pound 1.50 DL Hrs per Unit $12.00 per DL Hr Hours per unit $5.00 per DL Hr (1-2) Spending Varience 129.00 43.00 2,795.00 2,967.00 Overhead costs Variable overhead costs: Office supplies Actual Costs $146.00 124.00 2790.00 $3,060.00 Staff coffee lounge Indirect labor Total variable overhead cost Standard Rate (per Labor Hr) 2: Budget at Actual LH (3) Budget At Allowed LH Effiency Variance 0.20 249.00 256.00 (7.00) F 1.00 4.00 5.20 1,245.00 4,980.00 6,474.00 1,280.00 5,120.00 6,656.00 (35.00) F (140.00) F (182.00) F (1) Given Actual Costs 270.00 1,310.00 5,085.00 6,665.00 (3) Budget At Allowed LH 256.00 1,280.00 5,120.00 6,656.00 (1-3 Total Variance 14.00 30.00 (35.00) 9.00 U U F U Creating Budgets 5.1 C.1 Compute and Report the Flexible Budget Overhead Costs Indirect Labor $5,000 + $0.15 per machine hour Production Supervisors' Salaries $10,000 Utilities $3,000 +$0.05 per machine hour Supplies $0.20 per machine hour Depreciation $12,000 Equipment Maintenance $0.10 per machine hour Info providied: Expected Sales Standard Cost Standard Quantiry per Cake Inventory Desired Ending Inv. Sugar Whistles lbs DLHRS l bs lbs Sugar Required for Sales Volume Less Beginning Inventory Subtotal Plus Desired Ending Inventory Pounds Needed to Purchase Standard Cost Planned Sugar Expenditures - l bs - l bs - l bs - l bs - l bs $0.00 $0.00 ( +) Amt Needed to Meet Production ( +) Desired Ending Inventory ( =) Total Amount Need ( -) Beginning Inventory (=) Amount to be Purchase Fixed $5,000.00 $10,000.00 $3,000.00 Indirect Labor Production Supervisors' Salaries Utilities Supplies Depreciation Equipment Maintenance $0.15 $0.05 $0.20 Write All Numbers in absolute form (positive) AQp*SP $0.00 Flexible Budget $0.00 AQp*AP Final Answers Use for Formula Actual Price = AR Actual Qty Purch = AH Standard Price = SR Standard Quantity - Calc.. SH Actual Production DL Hrs per Unit Given Answer Price #DIV/0! $0.00 $$- Use to Solve if not Given All Answers Actual Price Actual Qty Standrd Price - FOH App Rate Standard Qty - Calc.. Unit Actual Result #DIV/0! Difference of Act vs Flex FOH Budget Variance # DIV/0! Favor DLH DLH Labor Machine Hours Variable Overhead Application #DIV/0! AQ ( AP#DIV/0! - SP) $0.00 Activity (in labor hours) $5,000 SP $0.00 ( AQ- SQ) $0.00 - #DIV/0! Per Unit Cost of DM #DIV/0! $0.00 Pos = Unfav Standard Quantiy $0.00 pounds # DIV/0! Pos = Unfav Actual DL Cost #DIV/0! Hours Standard Price per DL Hour X (Actual DL Hours - Standand DL Hours) $$ Per DL Hr DL Hours Used Standard DL Hours $$0.00 Neg = Favorable DL Hrs per Unit Actual Production $- Direct Labor Effciency Varience $0.00 Pos = Unfav Standard DL Hours $0.00 Actual Allocation Units * (Actual Rate-Standard Rate) Actual Allocation Units Actual Rate Standard Rate $0.00 #DIV/0! $0.00 Neg = Favorable Budgeted Variable OH $0.00 #DIV/0! Budgeted Allocation Activity Units $0.00 (denominator) Variable Overhead Price Variance # DIV/0! Pos = Unfav FOH App Rate $0.00 Overhead costs Variable overhead costs: Office supplies Staff coffee lounge Indirect labor Total variable overhead cost Overhead costs (1) Given Actual Costs 0.15 0.05 3.25 3.45 2: Budget at Actual LH Budgeted Hours $33,500 ( 3.00) ( 1.00) ( 65.00) ( 69.00) F F F F 14.00 80.00 ( 70.00) 24.00 U U F U $0.20 $$0.10 $0.15 $$0.30 $0.75 132.00 4 4.00 2,860.00 3,036.00 per machine hour per machine hour per machine hour Activity (in labor hours) $8,000.00 $9,000.00 $10,000.00 $1,600.00 $800.00 $1,200.00 $2,400.00 $6,000 $1,800 $900 $1,350 $2,700 $6,750 $2,000.00 $1,000.00 $1,500.00 $3,000.00 $7,500 $12,000.00 $10,000 $7,000.00 $4,000 $33,000 $12,000.00 $10,000.00 $7,000.00 $4,000.00 $33,000 $39,000 $39,750 Activity (in labor hours) 1,000 Cost Formula (per labor) Overhead Costs Variable Overhead Costs: Indirect Labor (Variable Portion) Utilities (Variable Portion) Supplies Equipment Maintenance Total Variable Overhead Costs Activity Level Variable Calc Fixed Total OH Cost per machine hour $12,000.00 $10,000.00 $7,000.00 $4,000.00 $33,000 $0.20 $0.10 $0.15 $0.30 $0.75 Total Overhead Cost (1-3 Total Variance (3) Budget At Allowed LH Var 5.1C2 132.00 4 4.00 2,860.00 3,036.00 146.00 124.00 2,790.00 3,060.00 Fixed $7,000 $12,000 $4,000 $0 $10,000 $0 $33,000.00 Fixed Overhad Costs: Production Supervisors Salaries Depreciation Indirect Labor (Fixed Portion) Utilities (Fixed Portion) Total Fixed Overhead Costs U U F U (2-3) Effiency Variance (3) Budget At Allowed LH 129.00 4 3.00 2,795.00 2,967.00 Variable overhead costs: Office supplies Staff coffee lounge Indirect labor Total variable overhead cost 17.00 81.00 ( 5.00) 93.00 $0.10 per machine hour $0.15 per machine hour $0.30 per machine hour Total (1-2) Spending Varience $0.20 per machine hour $10,000 Cost Formula (per labor) Overhead Costs Variable Overhead Costs: Indirect Labor (Variable Portion) Utilities (Variable Portion) Supplies Equipment Maintenance Total Variable Overhead Costs 129.00 4 3.00 2,795.00 2,967.00 (1) Given Actual Costs Overhead costs $10,000.00 $12,000.00 $5,000.00 $3,000.00 $30,000 $33,000 $7,000 $12,000 $4,000 Indirect Labor Production Supervisors' Salaries Utilities Supplies Depreciation Equipment Maintenance Neg = Favorable Neg = Favorable Pos = Unfav 0.15 146.00 0.05 124.00 3.25 2,790.00 3.45 3,060.00 Standard Rate (per Labor 2: Budget at Actual Hr) LH Variable overhead costs: Office supplies Staff coffee lounge Indirect labor Total variable overhead cost $10,000.00 $12,000.00 $5,000.00 $3,000.00 $30,000 $32,500 5.1C1 Example Overhead Costs Indirect Labor Production Supervisors' Salaries Utilities Supplies Depreciation Equipment Maintenance Actual Fixed Overhead - Budgeted Fixed Overhead Actual Fixed Overhead Budgeted Fixed Overhead $0.00 $0.00 Fixed Overhead Expense ( Budget Varience) Pos = Unfav 865.00 860.00 880.00 Standard Rate (per Labor Hr) $10,000.00 $12,000.00 $5,000.00 $3,000.00 $30,000 Neg = Favorable Pos = Unfav Actual Quantity DL Hours X (Actual Rate -Standard Rate DL Hours Used Actual DL Cost Standard Rate #DIV/0! $Neg = Favorable DL Hours Used Actual DL Cost $- Direct Labor Rate Varience Machine Hours Machine Hours Hours $40,500 2,000 3,000 $3,000.00 $1,000.00 $2,000.00 $500.00 $6,500 $6,000 2,000 4 ,000 1,000 $13,000 $9,000.00 $3,000.00 $6,000.00 $1,500.00 $19,500 $9,500 $3.00 $1.00 $2.00 $0.50 $6.50 $5,000 3,000 1,000 500 $9,500 $9,500 $29,000 Fixed Overhad Costs: Production Supervisors Salaries Depreciation Indirect Labor (Fixed Portion) Utilities (Fixed Portion) Total Fixed Overhead Costs Total Overhead Cost $16,000 $22,500 Cost Formula (per labor) 500 1,500 2,500 $5.00 $0.50 $4.00 $1.00 $10.50 $2,500.00 $250.00 $2,000.00 $500.00 $5,250 $7,500 750 6,000 1,500 $15,750 $12,500.00 $1,250.00 $10,000.00 $2,500.00 $26,250 Fixed Overhad Costs: Production Supervisors Salaries Depreciation Indirect Labor (Fixed Portion) Utilities (Fixed Portion) Total Fixed Overhead Costs $10,500 $6,000 2,500 1,500 500 $10,500 $10,500 Total Overhead Cost $15,750 $26,250 $36,750 5.1C2 5.1 TEST Q1 Cost Problem Write All Numbers in absolute form (positive) AQp*SP $0.00 Flexible Budget $0.00 AQp*AP Final Answers Use for Formula Actual Price = AR Actual Qty Purch = AH Standard Price = SR Standard Quantity - Calc.. SH Actual Production DL Hrs per Unit Given Answer Price $$1,150.00 $$1,080.00 1,800.00 0.60 Use to Solve if not Given All Answers Actual Price Actual Qty Standrd Price - FOH App Rate Standard Qty - Calc.. Unit Actual Result $0.00 Difference of Act vs Flex FOH Budget Variance $0.00 Favor DLH DLH Labor Machine Hours Variable Overhead Application Materials Purchased Total Cost of Materials Purchased Materials Used AQ ( AP$0.00 SP) $0.00 SP $0.00 -$11,000.00 Pos = Unfav Per Unit Cost of DM $11.4285714 Units Units $9,100.00 Pos = Unfav Standard Quantiy $6,300.00 pounds pounds Machine Hours Machine Hours $1,150.00 Hours $13,225.00 Hours $575.00 Pos = Unfav Actual DL Cost $11.50 $770.00 Pos = Unfav Actual Allocation Units * (Actual Rate-Standard Rate) Actual Allocation Units Actual Rate Standard Rate $1,150.00 $0.00 $0.00 Neg = Favorable Budgeted Variable OH $0.00 $0.00 Budgeted Allocation Activity Units $1,150.00 (denominator) FOH App Rate Actual Fixed Overhead - Budgeted Fixed Overhead Actual Fixed Overhead Budgeted Fixed Overhead $0.00 $0.00 Neg = Favorable Fixed Overhead Expense ( Budget Varience) $0.00 Pos = Unfav Write All Numbers in absolute form (positive) AQp*SP $24,000.00 Flexible Budget $22,200.00 AQp*AP Given Answer Price $12.97 $1,850.00 $12.00 $1,800.00 900.00 2.00 Unit Actual Result $24,000.00 Difference of Act vs Flex FOH Budget Variance - $1,800.00 Favor DLH DLH Total DM Variance Price 12.97 AQ ( AP$12.97 SP $12.00 TOTAL $875.68 Neg = Favorable Pos = Unfav SQ) $0.00 TOTAL $10,800.00 Neg = Favorable Pos = Unfav 900 Actual Qty Purchased X (Actual Price -Standard Price) Actual Qty Purchased ( *) (Actula Price (-) Standard Price) #DIV/0! $0.00 Neg = Favorable Materials Purchased Total Cost of Materials Purchased $0.00 Direct Material Price Varience #DIV/0! Pos = Unfav Per Unit Cost of DM #DIV/0! Standard Price X (Actual Quanity Used - Standand Quanty (-) Standard Price) Actual Quantity Used Standard Quanity $0.00 $0.00 Neg = Favorable DM Per Unit Actual Production 0 900 Direct Material Quanty Varience Units Units Materials Purchased Total Cost of Materials Purchased Materials Used $0.00 Pos = Unfav Standard Quantiy $0.00 pounds pounds Machine Hours Used Machine Hours Budgeted for Period DL Hours Used Actual DL Cost DL Hours Budgeted for Period Total Variable Manafacturing Overhead Actual Fixed Manufacturing OH Total Budgeted Fixed Overhead Actual Variable Manufacturing OH SP) $12.00 ( AQ- 900 Budgeted and Actual Information 1,000.00 900.00 Planned Production Actual Production $2,400.00 Unit #NAME? Standand Price and Quanities pounds per unit per yard 2.00 DL Hrs per Unit $18.00 per DL Hr Hours per unit $12.00 per DL Hr Machine Hours Variable Overhead Application SQ*SP Standard $21,600.00 Difference in Flex vs Stand Type of Variance Neg = Fav $600.00 Pos = Unfav Unfavor Neg = Favorable Pos = Unfavorable Pos = Favorable Neg = Unfavable Actual Quantity DL Hours X (Actual Rate -Standard Rate DL Hours Used Actual DL Cost Standard Rate 1,850 17.50 $18.00 Neg = Favorable DL Hours Used Actual DL Cost $1,850.00 32,375 Direct Labor Rate Varience Machine Hours Machine Hours $1,850.00 Hours $32,375.00 $2,000.00 Hours $24,000.00 $10,000.00 $12,000.00 ( $925.00) Pos = Unfav Actual DL Cost $17.50 Standard Price per DL Hour X (Actual DL Hours - Standand DL Hours) $$ Per DL Hr DL Hours Used Standard DL Hours $18.00 1,850.00 $1,800.00 Neg = Favorable DL Hrs per Unit Actual Production $2.00 900 Direct Labor Effciency Varience $900.00 Pos = Unfav Standard DL Hours $1,800.00 Actual Allocation Units * (Actual Rate-Standard Rate) Actual Allocation Units Actual Rate Standard Rate $1,850.00 $12.97 $12.00 Neg = Favorable Budgeted Variable OH $24,000.00 $12.97 Budgeted Allocation Activity Units $1,850.00 (denominator) Variable Overhead Price Variance $1,800.00 Pos = Unfav FOH App Rate Actual Fixed Overhead - Budgeted Fixed Overhead Actual Fixed Overhead Budgeted Fixed Overhead $10,000.00 $12,000.00 Fixed Overhead Expense ( Budget Varience) ($2,000.00) Pos = Unfav 5.1C2 Neg = Favorable Activity (in labor hours) 7,000 Cost Formula (per labor) 5,000 $1.00 $0.50 $1.50 $2.50 $5.50 $5,000.00 $2,500.00 $7,500.00 $12,500.00 $27,500 $7,000 3,500 10,500 17,500 $38,500 $9,000.00 $4,500.00 $13,500.00 $22,500.00 $49,500 Fixed Overhad Costs: Production Supervisors Salaries Depreciation Indirect Labor (Fixed Portion) Utilities (Fixed Portion) Total Fixed Overhead Costs $16,000 $7,500 4,000 3,500 1000 $16,000 $16,000 Total Overhead Cost $43,500 $54,500 Overhead Costs Variable Overhead Costs: Indirect Labor (Variable Portion) Utilities (Variable Portion) Supplies Equipment Maintenance Total Variable Overhead Costs 9,000 $65,500 5.1 TEST2 Q1-2 Cost Problem Write All Numbers in absolute form (positive) AQp*SP $0.00 Flexible Budget $0.00 AQp*AP Final Answers Use for Formula Actual Price = AR Actual Qty Purch = AH Standard Price = SR Standard Quantity - Calc.. SH Actual Production DL Hrs per Unit Given Answer Price $$610.00 $$600.00 1,500.00 0.40 Use to Solve if not Given All Answers Actual Price Actual Qty Standrd Price - FOH App Rate Standard Qty - Calc.. Unit Actual Result $0.00 Difference of Act vs Flex FOH Budget Variance $0.00 Favor DLH DLH Total DM Variance Price - Labor Machine Hours Variable Overhead Application AQ ( AP$0.00 Materials Purchased Total Cost of Materials Purchased Materials Used SP $0.00 TOTAL $0.00 Neg = Favorable Pos = Unfav SQ) $4,500.00 TOTAL $0.00 Neg = Favorable Pos = Unfav 1,500 Actual Qty Purchased X (Actual Price -Standard Price) Actual Qty Purchased ( *) (Actula Price (-) Standard Price) 3,600 $15.28 $15.00 Neg = Favorable Materials Purchased Total Cost of Materials Purchased 3,600 $55,000.00 Direct Material Price Varience $1,000.00 Pos = Unfav Per Unit Cost of DM $15.2777778 Standard Price X (Actual Quanity Used - Standand Quanty (-) Standard Price) Actual Quantity Used Standard Quanity $15.00 4 ,400 $4,500.00 Neg = Favorable DM Per Unit Actual Production 3 1,500 Direct Material Quanty Varience Units Units 3,600.00 $55,000.00 4 ,400.00 Machine Hours Used Machine Hours Budgeted for Period DL Hours Used Actual DL Cost DL Hours Budgeted for Period Total Variable Manafacturing Overhead Actual Fixed Manufacturing OH Total Budgeted Fixed Overhead Actual Variable Manufacturing OH SP) $0.00 ( AQ- 1,500 Budgeted and Actual Information 1,200.00 1,500.00 Planned Production Actual Production $0.00 Unit #NAME? Standand Price and Quanities $3.00 pounds per unit $15.00 per yard 0.40 DL Hrs per Unit $9.00 per DL Hr Hours per unit per DL Hr Materials ($1,500.00) Pos = Unfav Standard Quantiy $4,500.00 pounds pounds Actual Quantity DL Hours X (Actual Rate -Standard Rate DL Hours Used Actual DL Cost Standard Rate 610 9.10 $9.00 Neg = Favorable DL Hours Used Actual DL Cost $610.00 5,551 Direct Labor Rate Varience Machine Hours Machine Hours $610.00 Hours $5,551.00 Hours $61.00 Pos = Unfav Actual DL Cost $9.10 Standard Price per DL Hour X (Actual DL Hours - Standand DL Hours) $$ Per DL Hr DL Hours Used Standard DL Hours $9.00 610.00 $600.00 Neg = Favorable DL Hrs per Unit Actual Production $0.40 1,500 Direct Labor Effciency Varience $90.00 Pos = Unfav Standard DL Hours $600.00 Actual Allocation Units * (Actual Rate-Standard Rate) Actual Allocation Units Actual Rate Standard Rate $610.00 $0.00 $0.00 Variable Overhead Price Variance $0.00 Pos = Unfav Neg = Favorable FOH App Rate Budgeted Variable OH Budgeted Allocation Activity Units Fixed Overhead Expense ( Budget Varience) $0.00 Pos = Unfav Write All Numbers in absolute form (positive) AQp*SP $9,000.00 Flexible Budget $5,000.00 AQp*AP Given Answer Price $9.00 $1,000.00 $5.00 $960.00 120.00 8.00 Use to Solve if not Given All Answers Actual Price Actual Qty Standrd Price - FOH App Rate Standard Qty - Calc.. Unit Actual Result $9,000.00 Difference of Act vs Flex FOH Budget Variance - $4,000.00 Favor DLH DLH Labor Machine Hours Variable Overhead Application AQ ( AP$9.00 SP) $5.00 TOTAL $480.00 Neg = Favorable Pos = Unfav ( AQ- 120 SP $5.00 SQ) $0.00 TOTAL $600.00 Neg = Favorable Pos = Unfav 120 Actual Qty Purchased X (Actual Price -Standard Price) Actual Qty Purchased ( *) (Actula Price (-) Standard Price) #DIV/0! $0.00 Neg = Favorable Materials Purchased Total Cost of Materials Purchased $0.00 Direct Material Price Varience #DIV/0! Pos = Unfav Per Unit Cost of DM #DIV/0! Standard Price X (Actual Quanity Used - Standand Quanty (-) Standard Price) Actual Quantity Used Standard Quanity $0.00 $0.00 Neg = Favorable DM Per Unit Actual Production 0 120 Direct Material Quanty Varience Units Units Materials Purchased Total Cost of Materials Purchased Materials Used $0.00 Pos = Unfav Standard Quantiy $0.00 pounds pounds Machine Hours Used Machine Hours Budgeted for Period DL Hours Used Actual DL Cost DL Hours Budgeted for Period Total Variable Manafacturing Overhead Actual Fixed Manufacturing OH Total Budgeted Fixed Overhead Actual Variable Manufacturing OH $4,200.00 Unit Budgeted and Actual Information 100.00 120.00 Planned Production Actual Production Actual Quantity DL Hours X (Actual Rate -Standard Rate DL Hours Used Actual DL Cost Standard Rate 1,000 13.50 $14.00 Neg = Favorable DL Hours Used Actual DL Cost $1,000.00 13,500 Direct Labor Rate Varience Machine Hours Machine Hours $1,000.00 Hours $13,500.00 $800.00 Hours $5,250.00 $9,000.00 $7,500.00 ( $500.00) Pos = Unfav Actual DL Cost $13.50 Standard Price per DL Hour X (Actual DL Hours - Standand DL Hours) $$ Per DL Hr DL Hours Used Standard DL Hours $14.00 1,000.00 $960.00 Neg = Favorable DL Hrs per Unit Actual Production $8.00 120 Direct Labor Effciency Varience $560.00 Pos = Unfav Standard DL Hours $960.00 Actual Allocation Units * (Actual Rate-Standard Rate) Actual Allocation Units Actual Rate Standard Rate $1,000.00 $5.25 $5.00 Neg = Favorable Budgeted Variable OH $5,250.00 $5.25 Budgeted Allocation Activity Units $1,000.00 (denominator) Variable Overhead Price Variance $250.00 Pos = Unfav FOH App Rate Fixed Overhead Expense ( Budget Varience) $1,500.00 Pos = Unfav Write All Numbers in absolute form (positive) AQp*SP $0.00 Flexible Budget $0.00 AQp*AP Given Answer Price #DIV/0! $0.00 $$- Use to Solve if not Given All Answers Actual Price Actual Qty Standrd Price - FOH App Rate Standard Qty - Calc.. Unit Actual Result #DIV/0! Difference of Act vs Flex FOH Budget Variance # DIV/0! Favor DLH DLH Total DM Variance Price #DIV/0! Labor Machine Hours Variable Overhead Application #DIV/0! Unit AQ ( AP#DIV/0! SP) $0.00 TOTAL #DIV/0! Neg = Favorable Pos = Unfav ( AQ- SP $0.00 SQ) $0.00 TOTAL $0.00 Neg = Favorable Pos = Unfav - #DIV/0! Pos = Unfav Per Unit Cost of DM #DIV/0! Standard Price X (Actual Quanity Used - Standand Quanty (-) Standard Price) Actual Quantity Used Standard Quanity $0.00 $0.00 Neg = Favorable DM Per Unit Actual Production 0 - Direct Material Quanty Varience Planned Production Actual Production Units Units Materials Purchased Total Cost of Materials Purchased Materials Used $0.00 Pos = Unfav Standard Quantiy $0.00 pounds pounds Machine Hours Used Machine Hours Budgeted for Period DL Hours Used Actual DL Cost DL Hours Budgeted for Period Total Variable Manafacturing Overhead Actual Fixed Manufacturing OH Total Budgeted Fixed Overhead Actual Variable Manufacturing OH Actual Qty Purchased X (Actual Price -Standard Price) Actual Qty Purchased ( *) (Actula Price (-) Standard Price) #DIV/0! $0.00 Neg = Favorable Materials Purchased Total Cost of Materials Purchased $0.00 Direct Material Price Varience Budgeted and Actual Information Machine Hours Machine Hours Hours Actual Quantity DL Hours X (Actual Rate -Standard Rate DL Hours Used Actual DL Cost Standard Rate #DIV/0! $Neg = Favorable DL Hours Used Actual DL Cost $- Direct Labor Rate Varience # DIV/0! Pos = Unfav Actual DL Cost #DIV/0! Hours Standard Price per DL Hour X (Actual DL Hours - Standand DL Hours) $$ Per DL Hr DL Hours Used Standard DL Hours $$0.00 Neg = Favorable DL Hrs per Unit Actual Production $- Direct Labor Effciency Varience $0.00 Pos = Unfav Standard DL Hours $0.00 Actual Allocation Units * (Actual Rate-Standard Rate) Actual Allocation Units Actual Rate Standard Rate $0.00 #DIV/0! $0.00 Variable Overhead Price Variance #DIV/0! Pos = Unfav Neg = Favorable FOH App Rate Budgeted Variable OH Budgeted Allocation Activity Units Fixed Overhead Expense ( Budget Varience) $0.00 Pos = Unfav 5.1C2 Total Variable Overhead Costs Fixed Overhad Costs: Administration Rent 360 $11.62 $7.04 $$$18.66 $4,182 2,536 $6,718 360 $11.52 $6.71 $$$18.23 $0.00 $0.00 (denominator) Actual Fixed Overhead - Budgeted Fixed Overhead Actual Fixed Overhead Budgeted Fixed Overhead $0.00 $0.00 Neg = Favorable Activity (in labor hours) Cost Formula (per labor) Overhead Costs Variable Overhead Costs: Indirect Material Electricity SQ*SP Standard $0.00 Difference in Flex vs Stand Type of Variance Neg = Fav $0.00 Pos = Unfav Unfavor Neg = Favorable Pos = Unfavorable Pos = Favorable Neg = Unfavable #NAME? Standand Price and Quanities pounds per unit per yard DL Hrs per Unit per DL Hr Hours per unit per DL Hr Materials Actual Fixed Overhead - Budgeted Fixed Overhead Actual Fixed Overhead Budgeted Fixed Overhead $9,000.00 $7,500.00 Neg = Favorable 5.1 TEST2 Q1-2 Cost Problem Final Answers Use for Formula Actual Price = AR Actual Qty Purch = AH Standard Price = SR Standard Quantity - Calc.. SH Actual Production DL Hrs per Unit SQ*SP #NAME? Standand Price and Quanities pounds per unit per yard 8.00 DL Hrs per Unit $14.00 per DL Hr Hours per unit $5.00 per DL Hr Materials $0.00 Standard $4,800.00 Difference in Flex vs Stand Type of Variance Neg = Fav $200.00 Pos = Unfav Unfavor Neg = Favorable Pos = Unfavorable Pos = Favorable Neg = Unfavable Total DM Variance Price 9.00 $0.00 $610.00 (denominator) Actual Fixed Overhead - Budgeted Fixed Overhead Actual Fixed Overhead Budgeted Fixed Overhead $0.00 $0.00 Neg = Favorable 5.3 TEST Q3 Cost Problem Final Answers Use for Formula Actual Price = AR Actual Qty Purch = AH Standard Price = SR Standard Quantity - Calc.. SH Actual Production DL Hrs per Unit SQ*SP Standard $0.00 Difference in Flex vs Stand Type of Variance Neg = Fav $0.00 Pos = Unfav Unfavor Neg = Favorable Pos = Unfavorable Pos = Favorable Neg = Unfavable $4,148.00 $2,414.00 $$$6,562 $6,540 6,310 6500 6400 Total Fixed Overhead Costs $12,850 $12,900 Total Overhead Cost $19,568 $19,462 Activity (in labor hours) 2,000 Cost Formula (per labor) Standard Price per DL Hour X (Actual DL Hours - Standand DL Hours) $$ Per DL Hr DL Hours Used Standard DL Hours $11.00 1,150.00 $1,080.00 Neg = Favorable DL Hrs per Unit Actual Production $0.60 1,800 Direct Labor Effciency Varience 5.1 TEST Q3 Cost Problem 5.1 Test 2 Q4 Actual Quantity DL Hours X (Actual Rate -Standard Rate DL Hours Used Actual DL Cost Standard Rate 1,150 11.50 $11.00 Neg = Favorable DL Hours Used Actual DL Cost $1,150.00 13,225 Direct Labor Rate Varience $0.00 Labor Neg = Favorable Pos = Unfav Standard Price X (Actual Quanity Used - Standand Quanty (-) Standard Price) Actual Quantity Used Standard Quanity $13.00 7,000 $6,300.00 Neg = Favorable DM Per Unit Actual Production 3.5 1,800 Direct Material Quanty Varience Pos = Unfav Materials TOTAL $0.00 Actual Qty Purchased X (Actual Price -Standard Price) Actual Qty Purchased ( *) (Actula Price (-) Standard Price) 7,000 $11.43 $13.00 Neg = Favorable Materials Purchased Total Cost of Materials Purchased 7,000 $80,000.00 Direct Material Price Varience Standard DL Hours $1,080.00 Use to Solve if not Given All Answers Actual Price Actual Qty Standrd Price - FOH App Rate Standard Qty - Calc.. Neg = Favorable Pos = Unfav SQ) $6,300.00 ( AQ1,800 Variable Overhead Price Variance Final Answers Use for Formula Actual Price = AR Actual Qty Purch = AH Standard Price = SR Standard Quantity - Calc.. SH Actual Production DL Hrs per Unit TOTAL $0.00 #NAME? 7,000.00 $80,000.00 7,000.00 Machine Hours Used Machine Hours Budgeted for Period DL Hours Used Actual DL Cost DL Hours Budgeted for Period Total Variable Manafacturing Overhead Actual Fixed Manufacturing OH Total Budgeted Fixed Overhead Actual Variable Manufacturing OH $0.00 1,800 Budgeted and Actual Information 2,000.00 1,800.00 Planned Production Actual Production SQ*SP Activity (in labor hours) Unit Standand Price and Quanities $3.50 pounds per unit $13.00 per yard 0.60 DL Hrs per Unit $11.00 per DL Hr Hours per unit per DL Hr Materials Overhead Costs Variable Overhead Costs: Indirect Labor (Variable Portion) Utilities (Variable Portion) Supplies Equipment Maintenance Total Variable Overhead Costs Standard $0.00 Difference in Flex vs Stand Type of Variance Neg = Fav $0.00 Pos = Unfav Unfavor Neg = Favorable Pos = Unfavorable Pos = Favorable Neg = Unfavable Total DM Variance Price - $9,000 $6,750 $33,000 $39,750 $1,050.00 $350.00 $1,400.00 $700.00 $3,500 Standard Price X (Actual Quanity Used - Standand Quanty (-) Standard Price) Actual Quantity Used Standard Quanity $0.00 $0.00 Neg = Favorable DM Per Unit Actual Production 0 - Direct Material Quanty Varience Units Units pounds TOTAL $0.00 $8,000 $6,000 $33,000 $39,000 $7,000 $900 $300 $1,200 $600 $3,000 Actual Qty Purchased X (Actual Price -Standard Price) Actual Qty Purchased ( *) (Actula Price (-) Standard Price) #DIV/0! $0.00 Neg = Favorable Materials Purchased Total Cost of Materials Purchased $0.00 Direct Material Price Varience Pos = Unfav Budgeted and Actual Information Machine Hours Used Machine Hours Budgeted for Period DL Hours Used Actual DL Cost DL Hours Budgeted for Period Total Variable Manafacturing Overhead Actual Fixed Manufacturing OH Total Budgeted Fixed Overhead Actual Variable Manufacturing OH $6,000 $750.00 $250.00 $1,000.00 $500.00 $2,500 $0.15 $0.05 $0.20 $0.10 $0.50 Total Overhead Cost Materials Purchased Total Cost of Materials Purchased Materials Used Standard labor-hours allowed for the actual number of checks processed Neg = Favorable Pos = Unfav #NAME? Planned Production Actual Production Budgeted labor-hours Actual labor-hours TOTAL #DIV/0! $6,000 $3,000 $3,000 $30,000 $33,000 $0.10 $0.50 $30,000.00 Fixed Overhad Costs: Production Supervisors Salaries Depreciation Indirect Labor (Fixed Portion) Utilities (Fixed Portion) Total Fixed Overhead Costs Unit Standand Price and Quanities pounds per unit per pound DL Hrs per Unit per DL Hr Hours per unit per DL Hr Materials Standard $0.00 Difference in Flex vs Stand Type of Variance Neg = Fav $0.00 Pos = Unfav Unfavor Neg = Favorable Pos = Unfavorable Pos = Favorable Neg = Unfavable Total DM Variance Price #DIV/0! Overhead Costs Variable Overhead Costs: Indirect Labor (Variable Portion) Utilities (Variable Portion) Supplies Equipment Maintenance Total Variable Overhead Costs SQ*SP $5,000 $2,500 $2,500 $30,000 $32,500 $12,000.00 Total Cost Formula (per labor) Cost Problem Activity Level Variable Calc Variable Fixed Total OH Cost Budget OH Var #DIV/0! Overhead Costs Variable Overhead Costs: Indirect Labor (Variable Portion) Utilities (Variable Portion) Supplies Equipment Maintenance Total Variable Overhead Costs $3.00 $1.00 $2.00 $4.00 $10.00 $6,000.00 $2,000.00 $4,000.00 $8,000.00 $20,000 Fixed Overhad Costs: Production Supervisors Salaries Depreciation Indirect Labor (Fixed Portion) Utilities (Fixed Portion) Total Fixed Overhead Costs 3,000 4,000 $9,000 3,000 6,000 12,000 $30,000 $12,000.00 $4,000.00 $8,000.00 $16,000.00 $40,000 $9,500 5.1C2 $5,000 3,000 1,250 250 $9,500 $9,500 $29,500 Total Overhead Cost $39,500 $49,500 Activity (in labor hours) Cost Formula (per labor) 500 1,500 2,500 $5.00 $0.50 $4.00 $1.00 $10.50 $2,500.00 $250.00 $2,000.00 $500.00 $5,250 $7,500 750 6,000 1,500 $15,750 $12,500.00 $1,250.00 $10,000.00 $2,500.00 $26,250 Fixed Overhad Costs: Production Supervisors Salaries Depreciation Indirect Labor (Fixed Portion) Utilities (Fixed Portion) Total Fixed Overhead Costs $10,500 $6,000 2,500 1,500 500 $10,500 $10,500 Total Overhead Cost $15,750 $26,250 $36,750 Overhead Costs Variable Overhead Costs: Indirect Labor (Variable Portion) Utilities (Variable Portion) Supplies Equipment Maintenance Total Variable Overhead Costs $10,000 $7,500 $33,000 $40,500 Class Example A $400,000.00 $150,000.00 $250,000.00 $100,000.00 $150,000.00 B $500,000.00 $200,000.00 $300,000.00 $130,000.00 $170,000.00 C $100,000.00 $80,000.00 $20,000.00 $60,000.00 ($40,000.00) Total $1,000,000.00 $430,000.00 $570,000.00 $290,000.00 Reallocated Funds $280,000.00 A $400,000.00 $150,000.00 $250,000.00 $50,000.00 $200,000.00 Sales (-) Var Cost Cont. Margin (-) Fixed Cost (=) Net Income B $500,000.00 $200,000.00 $300,000.00 $80,000.00 $220,000.00 C $100,000.00 $80,000.00 $20,000.00 $10,000.00 $10,000.00 Total $1,000,000.00 $430,000.00 $570,000.00 $140,000.00 $430,000.00 $150,000.00 $280,000.00 Mod 6.1a Division Sales (-) Var Cost Cont. Margin (-) Fixed Cost (=) Segment Margin (-) Common Fixed Cost (=) Net Income Division Sales (-) Var Cost Cont. Margin (-) Fixed Cost (=) Segment Margin (-) Common Fixed Cost (=) Net Income A $360,000.00 $240,000.00 $120,000.00 B $450,000.00 $300,000.00 $150,000.00 100,000 $20,000.00 C $0.00 35,000 $115,000.00 $0.00 Total $810,000.00 $540,000.00 $270,000.00 $135,000.00 $135,000.00 $100,000.00 $35,000.00 Pg. 515 Ex 12-3 Gives Similar Ideas Mod 6.1a Division Sales (-) Var Cost Cont. Margin (-) Fixed Cost (=) Segment Margin (-) Common Fixed Cost (=) Net Income A $350,000.00 $140,000.00 $210,000.00 B $400,000.00 $300,000.00 $100,000.00 110,000 C Total $750,000.00 $440,000.00 $310,000.00 $145,000.00 $165,000.00 $100,000.00 $65,000.00 $0.00 35,000 $100,000.00 $65,000.00 $0.00 Product A Product B Selling price per product V ariable expenses per product Traceable fixed expenses per year $10.00 4.00 110,000 $20.00 15.00 35,000 Selling price per product Variable expenses per product Traceable fixed expenses per year Units Produced 35,000 20,000 Units Produced Product A Product B $10.00 $20.00 4.00 15.00 110,000 35,000 35,000 20,000 Chapter 12 - Problem 12-2 ROI Net Oper Income (divide by) Average Assest ROI Net Income Sales Net Income Sales Net Income Sales RI = Residual Income Net Income Assest Invested Mim Expectation Expectation $600,000.00 $5,000,000.00 0.12 Return on Investment Multiple Total with percent Total Percent $600,000.00 $7,500,000.00 0.08 8% $700,000.00 $6,000,000.00 0.1166666667 12% $7,500,000.00 $5,000,000.00 1.5 150% Return on Investment 0.14 14% Sales A ver Assest $6,000,000.00 $5,000,000.00 1.2 120% Return on Investment 0.12 12% Sales A ver Assest $600,000.00 $450,000.00 $150,000.00 $5,000,000.00 9% Pg 606 Ex13-3 Sales Aver Assest $600,000.00 Net Income $480,000.00 A ssest Invested $120,000.00 Mim Expectation Expectation $8,000,000.00 6% Make or Buy a compent DM Per Unit DL V OH Tracable FOH FOH Purchase Price $14 $10 $3 $6 $9 $42 Total Cost Make or Buy Model 15000 Per Units $210,000 $150,000 $45,000 $90,000 $135,000 $630,000 Make or Buy Model Make $5.00 $3.00 $0.50 $3.00 DM DL V OH Tracable FOH Common FOH Purchase Price Total Differnce Units Produce Net operating Income New Product Gain or Loss - in Total Buy $$$$1.50 $2.25 $$13.75 Make $14.00 $10.00 $3.00 $6.00 DM DL V OH Tracable FOH FOH Purchase Price Total Differnce Units Produce Loss or Gain New Product Gain or Loss - in Total $2.25 $12.00 $15.75 This Year What About Future Cost ($2.00) 60,000 ($120,000.00) ($120,000.00) Buy $$$$4.00 Difference $14.00 $10.00 $3.00 $2.00 $9.00 $0.00 $35.00 ($35.00) $48.00 This Year What About Future Cost ($6.00) $9.00 $$42.00 15,000 ($90,000.00) 150,000.00 $60,000.00 Pg 608 Ex 13-7 Make $3.60 $10.00 $2.40 $- DM DL V OH Tracable FOH FOH Purchase Price True Cost to Produce Differnce Units Produce Loss or Gain to Buy New Product Gain or Loss - in Total Buy $$$$- $9.00 $$25.00 $(2.00) $30,000.00 ($60,000.00) $80,000.00 $20,000.00 Pg. 606 Ex 13-4 Base Cost DM $84.00 DL $45.00 OH $20.00 $$$True Cost to Produce $149.00 Difference Pg 608 Ex 13-7 $3.60 $10.00 $2.40 $0.00 $6.00 $3.00 $21.00 ($21.00) $27.00 This Year What About Future Cost DM DL V OH Tracable FOH FOH Purchase Price True Cost to Produce Differnce Units Produce Loss or Gain to Buy New Product Gain or Loss - in Total One Time Special Order Special Tool Units Neede Extra $2.00 $$12.00 $$$- New Cost $86.00 $45.00 $32.00 $$$$163.00 $250 20 $12.50 One Time Special Order DM DL FOH V OH Pg. 606 Ex 13-4 Base Cost $84.00 $45.00 $16.00 $4.00 Extra $2.00 $$$$- True Cost to Produce $149.00 Total Offered Difference of Offer to Increase/Decreased Cost Total Units Produced Fixed Overhead $1,600 100 $16.00 Special Tool Units Neede New Fixed New Cost $86.00 $45.00 $12.50 $4.00 $$$147.50 $169.95 $22.45 $250 20 $12.50 Mod 6.1 C3 Make $3.00 $2.50 $1.00 $- DM DL V OH FOH VS&A FS&A Total Split Off Process Further Combined Cost $2.00 $$8.50 6.1 B1 Sales net operating Income average Oper Assest Sell 100,000.00 150,000.00 10,000.00 Bacon Pork Chop Pig Feet PIG Cost (30,000.00) (20,000.00) (5,000.00) New Sale New Cost in Sale Difference 140,000.00 110,000.00 158,000.00 138,000.00 25,000.00 20,000.00 $10,000,000.00 Margin and Turnoever $3,000,000.00 margin - net operating income/sales $20,000,000.00urnover is sales/average margin of turnover T Margin Turnover ROI 0.3 0.5 0.15 Sales net operating Income average Oper Assest $15,000,000.00 $3,000,000.00 $30,000,000.00 Margin Turnover ROI 0.2 0.5 0.1 6.1B2 Residual Income Mim Required Return of the Company (avg operating Assests*mim required rate) subtract that amount form the net operating income Sales $10,000,000.00 Net Operating Income $2,000,000.00 Net Operating Income $2,200,000.00 A verage Operating Assets $12,000,000.00 A verage Operating Assets $15,000,000.00 Mimmun required Rate 15% Mimmun required Rate 12% Mim Req. Rate: Residual Income $1,800,000.00 $200,000.00 Mim Req. Rate: Residual Income 6.1C1 Total Outdoor $1,800,000.00 $400,000.00 Department Indoor 6.1C1 Indoor Total Outdoor Department Indoor 10% reduction Sales Variable Expenses Contribution Margin Fixed expenses $4,800,000 1,800,000 3,000,000 2,800,000 $1,200,000 400,000 800,000 1,000,000 $200,000 $(200,000) 90% 90% 220000 $3,600,000 1,400,000 2,200,000 1,800,000 $400,000 $4,800,000 1,800,000 3,000,000 2,800,000 $1,200,000 400,000 800,000 1,000,000 $3,600,000 1,400,000 2,200,000 1,800,000 Net operating income (loss) $200,000 Cont FC Net operating income (loss) $3,240,000.00 $1,260,000.00 $1,980,000.00 $400,000.00 $2,200,000.00 Sales Variable Expenses Contribution Margin Fixed expenses $(200,000) $400,000 Cont FC Seg margin Cont FC Seg margin Common FC Net inc Common FC Net inc 6.1C1 Total Outdoor Department Indoor Indoor 10% reduction Sales Variable Expenses Contribution Margin Fixed expenses $4,800,000 1,800,000 3,000,000 2,800,000 $1,200,000 400,000 800,000 1,000,000 $200,000 $(200,000) $400,000 90% 90% 220000 $3,600,000 1,400,000 2,200,000 1,800,000 Cont FC Net operating income (loss) Cont FC Seg margin Common FC Net inc Total Sales (-) Var Cost Cont. Margin (-) Fixed Cost (=) Segment Margin (-) Common Fixed Cost (=) Net Income $4,800,000.00 $1,800,000.00 $3,000,000.00 $2,800,000.00 $200,000.00 Outdoor Indoor $1,200,000.00 $3,600,000.00 $400,000.00 $1,400,000.00 $800,000.00 $2,200,000.00 $1,000,000.00 $1,800,000.00 $(200,000.00) $400,000.00 $3,240,000.00 $1,260,000.00 $1,980,000.00 $400,000.00 $2,200,000.00 10,000.00 (12,000.00) 10,000.00 Make Buy Difference $342.00 $342.00 $0.00 $80.00 $80.00 $0.00 $48.00 $48.00 $0.00 $$$0.00 $520.00 $468.00 $52.00 $$$0.00 $990.00 $938.00 This Year What About Future Cost $52.00 $1,000.00 $52,000.00 $52,000.00 Selling price per product V ariable expenses per product Traceable fixed expenses per year Units Produced Product A Product B $12.00 $18.00 8.00 12.00 80,000 50,000 30,000 25,000 Net Present Value Internal Rate of Return Payback Method Profitability index Simple Rate of Return Present Value of $1 Present Value of Future income (-) Present of Future Outflows Net Present Value Cost Est. Life Est. Annual Saving Est. Salvage Value Reg.d ROI Class Example Total Gain $114,000.00 $10,000.00 Gain $124,000.00 Cost $100,000.00 What's Left $24,000.00 $1,000,000.00 4 years $28,500.00 $10,000.00 10% Gain/Year PV % $28,500.00 0.909 $28,500.00 0.826 $28,500.00 0.751 $38,500.00 0.683 Total Present Value Cost Total Gain Year 1 Year 2 Year 3 Year 4 Class Example Present Value of Future income Net Present Value Cost Est. Life Est. Annual Saving Est. Salvage Value Reg.d ROI Value $25,906.50 $23,541.00 $21,403.50 $26,295.50 $97,146.50 $100,000.00 Zero or above mets or above ($2,853.50) Neg is less than Req. ROI Pg E14-1 7000 Interest rate 4.968 Total $34,776.00 $40,000.00 $(5,224.00) Not Good (-) Present of Future Outflows Internal Rate of Return Cost Est. Life Est. Annual Saving Est. Salvage Value Reg.d ROI $40,000.00 8 years $7,000.00 $12% Cost Ann. Saving Est PV Factor 8% 9% Usage/Period Year 1 Year 2 Year 3 Year 4 Net Present Value Cost Est. Life Est. Annual Saving Est. Salvage Value Reg.d ROI $34,776.00 $40,000.00 8 years $7,000.00 $2,000.00 12% Pay Back Life Cost Ann. Saving Est PV Factor $40,000.00 $7,000.00 5.714 Our Percentage 5.747 5.714 5.535 0.033 0.212 0.245 $40,000.00 $7,000.00 5.714 Year to Pay Back yr2 yr3 6 years yr5 yr 1 yr2 yr3 yr4 yr5 yr6 yr7 $(23,000.00) $1,000.00 $(22,000.00) $2,000.00 $(20,000.00) $2,500.00 $(17,500.00) $4,000.00 $(13,500.00) $5,000.00 $(8,500.00) $6,000.00 $(2,500.00) $5,000.00 $2,500.00 yr6 $3,000.00 $2,500.00 yr 9 $2,500.00 yr 10 $2,500.00 yr 11 $2,500.00 yr 12 $2,500.00 Ex 14-4 pg 656 Project A Project B Project C Project D $(90,000.00) $(100,000.00) $(70,000.00) $(120,000.00) $126,000.00 $138,000.00 $105,000.00 $160,000.00 $36,000.00 $38,000.00 $35,000.00 $40,000.00 5 7 6 6 Investment Required Present Value of Cash Inflow Net Present Value Life of the Project NPV Cost $36,000.00 $(90,000.00) 0.40 Profitiblity Index Number Simple Rate of Return $38,000.00 $(100,000.00) 0.38 $35,000.00 $(70,000.00) 0.50 $40,000.00 $(120,000.00) 0.33 Multiple by (-1) to create Positive AAROR - Accrual Accting Rate of Return nnual Saving - Annual Deprciation Exp Cost Cost Est. Life Est. Annual Saving Est. Salvage Value Reg.d ROI Saving Taxed Percentagee Tax Me $40,000.00 8 years $7,000.00 $2,000.00 12% Year 1 $7,000.00 40% $2,800.00 $4,200.00 Cost SV $7,000.00 $5,000.00 Life $40,000.00 Year 2 $7,000.00 40% $2,800.00 $4,200.00 Cost SV $40,000.00 Life Year 3 $7,000.00 40% $2,800.00 $4,200.00 $$5.00 $(40,000.00) $10,000.00 $(30,000.00) 9000 $(21,000.00) 7000 $(14,000.00) 5000 $(9,000.00) 7000 $(2,000.00) 5000 $3,000.00 yr7 yr 8 Profitabily Index Value $29,542.50 $26,845.00 $24,407.50 $32,442.50 $113,237.50 $100,000.00 $13,237.50 Class Example Total Gain $130,000.00 $10,000.00 Gain $140,000.00 Cost $100,000.00 What's Left $40,000.00 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 0.990 0.980 0.971 0.961 0.951 0.942 0.933 0.923 0.914 0.905 0.896 0.887 0.879 0.870 0.861 0.853 0.844 0.836 0.828 0.820 0.780 0.742 0.706 0.672 0.608 0.980 0.961 0.942 0.924 0.906 0.888 0.871 0.853 0.837 0.820 0.804 0.788 0.773 0.758 0.743 0.728 0.714 0.700 0.686 0.673 0.610 0.552 0.500 0.453 0.372 0.971 0.943 0.915 0.888 0.863 0.837 0.813 0.789 0.766 0.744 0.722 0.701 0.681 0.661 0.642 0.623 0.605 0.587 0.570 0.554 0.478 0.412 0.355 0.307 0.228 0.962 0.925 0.889 0.855 0.822 0.790 0.760 0.731 0.703 0.676 0.650 0.625 0.601 0.577 0.555 0.534 0.513 0.494 0.475 0.456 0.375 0.308 0.253 0.208 0.141 0.952 0.907 0.864 0.823 0.784 0.746 0.711 0.677 0.645 0.614 0.585 0.557 0.530 0.505 0.481 0.458 0.436 0.416 0.396 0.377 0.295 0.231 0.181 0.142 0.087 0.943 0.890 0.840 0.792 0.747 0.705 0.665 0.627 0.592 0.558 0.527 0.497 0.469 0.442 0.417 0.394 0.371 0.350 0.331 0.312 0.233 0.174 0.130 0.097 0.054 0.935 0.873 0.816 0.763 0.713 0.666 0.623 0.582 0.544 0.508 0.475 0.444 0.415 0.388 0.362 0.339 0.317 0.296 0.277 0.258 0.184 0.131 0.094 0.067 0.034 0.926 0.857 0.794 0.735 0.681 0.630 0.583 0.540 0.500 0.463 0.429 0.397 0.368 0.340 0.315 0.292 0.270 0.250 0.232 0.215 0.146 0.099 0.068 0.046 0.021 0.917 0.842 0.772 0.708 0.650 0.596 0.547 0.502 0.460 0.422 0.388 0.356 0.326 0.299 0.275 0.252 0.231 0.212 0.194 0.178 0.116 0.075 0.049 0.032 0.013 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 0.350 0.319 0.290 0.263 0.239 0.218 0.198 0.180 0.164 0.149 0.092 0.057 0.036 0.022 0.009 0.901 0.812 0.731 0.659 0.593 0.535 0.482 0.434 0.391 0.352 0.317 0.286 0.258 0.232 0.209 0.188 0.170 0.153 0.138 0.124 0.074 0.044 0.026 0.015 0.005 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322 0.287 0.257 0.229 0.205 0.183 0.163 0.146 0.130 0.116 0.104 0.059 0.033 0.019 0.011 0.003 0.885 0.783 0.693 0.613 0.543 0.480 0.425 0.376 0.333 0.295 0.261 0.231 0.204 0.181 0.160 0.142 0.125 0.111 0.098 0.087 0.047 0.026 0.014 0.008 0.002 0.877 0.769 0.675 0.592 0.519 0.456 0.400 0.351 0.308 0.270 0.237 0.208 0.182 0.160 0.140 0.123 0.108 0.095 0.083 0.073 0.038 0.020 0.010 0.005 0.001 0.870 0.756 0.658 0.572 0.497 0.432 0.376 0.327 0.284 0.247 0.215 0.187 0.163 0.141 0.123 0.107 0.093 0.081 0.070 0.061 0.030 0.015 0.008 0.004 0.001 For Present Value of an Ordinary Annuity, see second sheet Present Value of an Ordinary Annuity yr4 Investment Cash Inflow Total Yr1 $15,000.00 $1,000.00 Yr2 $8,000.00 $2,000.00 Yr3 $2,500.00 Yr4 $4,000.00 Yr5 $5,000.00 Yr6 $6,000.00 Yr7 $5,000.00 Yr8 $4,000.00 Yr9 $3,000.00 Yr10 $2,000.00 $34,500.00 Class Example Total Gain $130,000.00 $10,000.00 Gain $140,000.00 Cost $100,000.00 What's Left $40,000.00 Gain/Year PV % $32,500.00 0.909 $32,500.00 0.826 $32,500.00 0.751 $47,500.00 0.683 Total Present Value Cost Total Gain $500,000.00 4 years $32,500.00 $15,000.00 10% Usage/Period Year 1 Year 2 Year 3 Year 4 yr 1 Payback Method Cost Est. Life Est. Annual Saving Est. Salvage Value Reg.d ROI $1,000,000.00 4 years $32,500.00 $15,000.00 10% Period 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 25 30 35 40 50 $2,000.00 Cost - SV $40,000.00 Life 5.00% Index comparable Working Capital Year 4 $7,000.00 40% $2,800.00 $4,200.00 $40,000.00 $5.00 Tax 8,000.00 Year 5 $7,000.00 40% $2,800.00 $4,200.00 40% 3,200.00 Gain/Year PV % $32,500.00 0.909 $32,500.00 0.826 $32,500.00 0.751 $47,500.00 0.683 Total Present Value Cost Total Gain Value $29,542.50 $26,845.00 $24,407.50 $32,442.50 $113,237.50 $100,000.00 $13,237.50 Period 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 25 30 35 40 50 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 0.990 1.970 2.941 3.902 4.853 5.795 6.728 7.652 8.566 9.471 10.368 11.255 12.134 13.004 13.865 14.718 15.562 16.398 17.226 18.046 22.023 25.808 29.409 32.835 39.196 0.980 1.942 2.884 3.808 4.713 5.601 6.472 7.325 8.162 8.983 9.787 10.575 11.348 12.106 12.849 13.578 14.292 14.992 15.678 16.351 19.523 22.396 24.999 27.355 31.424 0.971 1.913 2.829 3.717 4.580 5.417 6.230 7.020 7.786 8.530 9.253 9.954 10.635 11.296 11.938 12.561 13.166 13.754 14.324 14.877 17.413 19.600 21.487 23.115 25.730 0.962 1.886 2.775 3.630 4.452 5.242 6.002 6.733 7.435 8.111 8.760 9.385 9.986 10.563 11.118 11.652 12.166 12.659 13.134 13.590 15.622 17.292 18.665 19.793 21.482 0.952 1.859 2.723 3.546 4.329 5.076 5.786 6.463 7.108 7.722 8.306 8.863 9.394 9.899 10.380 10.838 11.274 11.690 12.085 12.462 14.094 15.372 16.374 17.159 18.256 0.943 1.833 2.673 3.465 4.212 4.917 5.582 6.210 6.802 7.360 7.887 8.384 8.853 9.295 9.712 10.106 10.477 10.828 11.158 11.470 12.783 13.765 14.498 15.046 15.762 0.935 1.808 2.624 3.387 4.100 4.767 5.389 5.971 6.515 7.024 7.499 7.943 8.358 8.745 9.108 9.447 9.763 10.059 10.336 10.594 11.654 12.409 12.948 13.332 13.801 0.926 1.783 2.577 3.312 3.993 4.623 5.206 5.747 6.247 6.710 7.139 7.536 7.904 8.244 8.559 8.851 9.122 9.372 9.604 9.818 10.675 11.258 11.655 11.925 12.233 0.917 1.759 2.531 3.240 3.890 4.486 5.033 5.535 5.995 6.418 6.805 7.161 7.487 7.786 8.061 8.313 8.544 8.756 8.950 9.129 9.823 10.274 10.567 10.757 10.962 0.909 1.736 2.487 3.170 3.791 4.355 4.868 5.335 5.759 6.145 6.495 6.814 7.103 7.367 7.606 7.824 8.022 8.201 8.365 8.514 9.077 9.427 9.644 9.779 9.915 0.901 1.713 2.444 3.102 3.696 4.231 4.712 5.146 5.537 5.889 6.207 6.492 6.750 6.982 7.191 7.379 7.549 7.702 7.839 7.963 8.422 8.694 8.855 8.951 9.042 0.893 1.690 2.402 3.037 3.605 4.111 4.564 4.968 5.328 5.650 5.938 6.194 6.424 6.628 6.811 6.974 7.120 7.250 7.366 7.469 7.843 8.055 8.176 8.244 8.305 0.885 1.668 2.361 2.974 3.517 3.998 4.423 4.799 5.132 5.426 5.687 5.918 6.122 6.302 6.462 6.604 6.729 6.840 6.938 7.025 7.330 7.496 7.586 7.634 7.675 0.877 1.647 2.322 2.914 3.433 3.889 4.288 4.639 4.946 5.216 5.453 5.660 5.842 6.002 6.142 6.265 6.373 6.467 6.550 6.623 6.873 7.003 7.070 7.105 7.133 0.870 1.626 2.283 2.855 3.352 3.784 4.160 4.487 4.772 5.019 5.234 5.421 5.583 5.724 5.847 5.954 6.047 6.128 6.198 6.259 6.464 6.566 6.617 6.642 6.661 For Present Value of $1, see first sheet Mod 6.1a Division Sales (-) Var Cost Cont. Margin (-) Fixed Cost (=) Segment Margin (-) Common Fixed Cost (=) Net Income A $350,000.00 $140,000.00 $210,000.00 110,000 $100,000.00 6.1 B1 Sales net operating Income average Oper Assest $10,000,000.00 $3,000,000.00 $25,000,000.00 Margin Turnover ROI B C $400,000.00 $300,000.00 $100,000.00 35,000 $65,000.00 Total $750,000.00 $440,000.00 $310,000.00 $145,000.00 $165,000.00 $100,000.00 $65,000.00 $0.00 $0.00 Selling price per product Variable expenses per product Traceable fixed expenses per year Units Produced Margin and Turnoever margin - net operating income/sales Turnover is sales/average margin of turnover 0.30 0.40 0.12 Example Sales net operating Income average Oper Assest $15,000,000.00 $3,000,000.00 $30,000,000.00 Margin Turnover ROI 0.20 0.50 0.10 6.1B2 Residual Income Mim Required Return of the Company (avg operating Assests*mim required rate) subtract that amount form the net operating income Sales $8,000,000.00 Net Operating Income $1,750,000.00 Net Operating Income Average Operating Assets $10,000,000.00 Average Operating Assets Mimmun required Rate 16% Mimmun required Rate Mim Req. Rate: Residual Income EXAMPLE $2,200,000.00 $15,000,000.00 12% $1,600,000.00 Mim Req. Rate: $150,000.00 Residual Income $1,800,000.00 $400,000.00 6.1C1 Department Total Outdoor Indoor Indoor 10% reduction Sales Variable Expenses Contribution Margin Fixed expenses $4,800,000.00 $2,000,000.00 $2,800,000.00 $2,400,000.00 $1,600,000.00 $800,000.00 $800,000.00 $900,000.00 $3,200,000.00 $1,200,000.00 $2,000,000.00 $1,500,000.00 $400,000 $(100,000.00) $500,000.00 Contribution Margin Decrease Lost Contribution Margin Out door 800,000 90% 90% $200,000.00 $2,000,000.00 10% $200,000.00 $2,880,000.00 $1,080,000.00 $1,800,000.00 $500,000.00 Cont FC Net operating income (loss) $800,000.00 Outdoor (+) Margin Dec $1,300,000.00 $900,000.00 $400,000.00 $800,000.00 $200,000.00 $1,000,000.00 $500,000.00 $500,000.00 Unavoidable Cost Fixed Cost Saving Contribution Margin Lost if the Outdoor Dept Is dropped Lost From the Outdoor dept $800,000.00 Lost form Indoor $200,000.00 Total Lost Contribution $1,000,000.00 Less Avoidable fixed cost $500,000.00 Decrease in Overall Net Ope Inc $300,000.00 neg 6.1C1 Example Department Total Sales Variable Expenses Contribution Margin Fixed expenses Outdoor Indoor $5,700,000 2,200,000 3,500,000 3,200,000 $1,500,000 500,000 1,000,000 1,300,000 $4,200,000 1,700,000 2,500,000 1,900,000 $300,000 $(300,000) $600,000 Contribution Margin Decrease Lost Contribution Margin Out door 1,000,000 $2,500,000.00 12% $300,000.00 Lost Cont Margin 10% reduction 88% 88% $300,000.00 Cont FC Net operating income (loss) Outdoor (+) Margin Dec Unavoidable Cost Fixed Cost Saving Contribution Margin Lost if the Outdoor Dept Is dropped Lost From the Outdoor dept $1,000,000.00 Lost form Indoor $300,000.00 Total Lost Contribution $1,300,000.00 Less Avoidable fixed cost $1,000,000.00 Decrease in Overall Net Ope Inc $300,000.00 neg Mod 6.1 C3 DM DL VOH FOH VS&A FS&A Total Make $3.00 $2.50 $1.00 $$2.00 $$8.50 $1,000,000.00 $1,000,000.00 $300,000.00 $1,300,000.00 $300,000.00 $1,000,000.00 Indoor $3,696,000.00 $1,496,000.00 $2,200,000.00 $300,000.00 $2,200,000.00 $1,900,000 Product A Product B $10.00 $20.00 4.00 15.00 110,000 35,000 35,000 20,000 4.1 Test 1.10 The Company ProPats Static Actual Indirect Material Electricity Units Produced Activity Cost Pool Admin Rent Activity Rate - if Given Type here Admin Rent $Total Rate $4,182 $2,536 Activity Rate Indirect Material Total Overhead to Apply Static Name 3 $4,148 $2,414 360 Applied Overhead = Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) 1.01 $6,540 $6,500 Actual Direct Labor $4,182 Total Activity Rate $1.01 Total $4,207.74 340 Est. Annual cost $6,540 $6,310 Est. Activity cost $6,500 $6,400 Activity Cost direct labor dollars inspections machine hours Rent Application Rate (Divide) Applied Overhead = Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) $0.99 $6,310.00 $6,400.00 Actual Direct Labor $4,182.00 Total Activity Rate $0.99 Total $4,123.19 $$1.10 $0.99 Per DL$ Per Move Per Machine Hour Application Rate (Divide) $2.09 Activity Data for Products Manufactored by Com. - GIVEN Activity Data for Products Actual Indirect Material $4,182 Electricity $2,536 Actual Solve the Activity Rate if Not Given Admin Application Rate (Divide) Admin $1.10 $4,182.00 $4,600.20 Admin Applied Overhead = Static Name 3 $4,148 $2,414 Rent $0.99 $2,536.00 $2,510.64 Rent Activity Rate Indirect Material Total Overhead to Apply $1.10 $4,148.00 $4,562.80 $0.99 $2,414.00 $2,389.86 Total Overhead Appiled Indirect Material Electricity Total Cost Total Units Produced Cost Per Unit Actual $7,110.84 $4,182.00 $2,536.00 $13,828.84 360 $38.41 Static $6,952.66 $4,148.00 $2,414.00 $13,514.66 340 $39.75 Total $2.09 $6,718.00 $7,110.84 Total $2.09 $6,562.00 $6,952.66 Activity Rate if not Given Activity Cost Pool Supervision Inspection Depreciation Est. Budgeted Overhead Budgeted Cost Labor Hrs Application Rate (x) #DIV/0! Est Cost $1.01 $0.99 #DIV/0! #DIV/0! $$Actual Direct Labor $4,182.00 Est Activity Level DL Cost Inspections Machine Hours Total Activity Rate #DIV/0! Total #DIV/0! Activity (in labor hours) Actual Static Cost Formula (per labor) 360 360 Overhead Costs Variable Overhead Costs: Indirect Material $4,182.00 $4,148.00 Electricity $2,536.00 $2,414.00 Total Variable Overhead Costs $6,718.00 $6,562.00 Fixed Overhad Costs: Administration Rent Total Fixed Overhead Costs $6,540.00 $6,310.00 $12,850.00 $6,500.00 $6,400.00 $12,900.00 Total Overhead Cost $19,568.00 $19,462.00 $106.00 ...
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This note was uploaded on 03/26/2012 for the course AC505 AC505 taught by Professor Dillan during the Spring '10 term at Keller Graduate School of Management.

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