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2/2/12 McGraw-Hill's Connect - Ebook 1/7 connect.mcgraw-hill.com/connect/hmEBook.do?setTab=sectionTabs Managerial Accounting, eBook 14/e Content Chapter9: Flexible Budgets and Performance Analysis Problems All applicable problems are available with McGraw-Hill's Connect ™ Accounting . PROBLEM 9–20 Activity and Spending Variances [LO1 , LO2 , LO3 ] You have just been hired by SecuriDoor Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company's costing system and “do what you can to help us get better control of our manufacturing overhead costs.” You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for April: During April, the company worked 18,000 machine-hours and produced 12,000 units. The company had originally planned to work 20,000 machine-hours during April. Required: 1. Prepare a report showing the activity variances for April. Explain what these variances mean. 2. Prepare a report showing the spending variances for April. Explain what these variances mean. p. 411
2/2/12 McGraw-Hill's Connect - Ebook 2/7 connect.mcgraw-hill.com/connect/hmEBook.do?setTab=sectionTabs PROBLEM 9–21 More Than One Cost Driver [LO4 , LO5 ] Verona Pizza is a small neighborhood pizzeria that has a small area for in-store dining as well offering takeout and free home delivery services. The pizzeria's owner has determined that the shop has two major cost drivers—the number of pizzas sold and the number of deliveries made. Data concerning the pizzeria's costs appear below: In October, the pizzeria budgeted for 1,500 pizzas at an average selling price of $13.00 per pizza and for 200 deliveries. Data concerning the pizzeria's operations in October appear below: Required: 1. Prepare a flexible budget performance report that shows both activity variances and revenue and spending variances for the pizzeria for October. 2.
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