ACCT 212 Connect Homework 8 Flexible Budgets Assignment solutions complete answers

ACCT 212 Connect Homework 8 Flexible Budgets Assignment solutions complete answers 

 

Mia Wiz sells computers. During May, it sold 700 computers at a $1,000 per unit price. The fixed budget for May predicted sales of 750 computers at an per unit price of $960.

 

For May, Mariana company planned production of 8,800 units (80% of its production capacity of 11,000 units) and prepared the following overhead budget. The company applies overhead with a standard of 3 DLH per unit and a standard overhead rate of $3.79 per DLH.

It actually operated at 90% capacity (9,900 units) in May and incurred the following actual overhead.

 

Javon Company set standards of 3 hours of direct labor per unit at a rate of $15.20 per hour. During October, the company actually uses 17,000 hours of direct labor at a $261,800 total cost to produce 5,800 units. In November, the company uses 21,000 hours of direct labor at a $324,450 total cost to produce 6,200 units of product.

 

Hart Company made 3,180 shelves using 22,180 pounds of wood costing $288,340. The company's direct materials standards for one shelf are 8 pounds of wood at $12.90 per pound.

 

Nina Company prepared the following fixed budget for July using 7,740 units for budgeted sales. Actual sales were 7,440 units and actual costs are shown below.

Prepare a flexible budget performance report for July at activity level of 7,440 units. Show variances between budgeted and actual amounts. (Indicate the effect of each variance by selecting favorable, unfavorable, or no variance.)

 

Tempo Company's fixed budget (based on sales of 16,000 units) folllows.

 

JPAK manufactures and sells mountain bikes. Classify each of the following costs as fixed or variable with respect to the number of bikes made.

 

Tempo Company's fixed budget (based on sales of 14,000 units) folllows.
 

Fixed Budget
Sales (14,000 units × $212 per unit)
2,968,000
Costs
 
Direct materials
350,000
Direct labor
602,000
Indirect materials
378,000
Supervisor salary
150,000
Sales commissions
126,000
Shipping
224,000
Administrative salaries
200,000
Depreciation—Office equipment
170,000
Insurance
140,000
Office rent
150,000
Income
478,000
 
1. Compute total variable cost per unit.
2. Compute total fixed costs.
3. Prepare a flexible budget at activity levels of 12,000 units and 16,000 units.

 

Nina Company prepared the following fixed budget for July using 7,800 units for budgeted sales. Actual sales were 7,500 units and actual costs are shown below.
 

Fixed Budget
For Month Ended July 31
Variable Amount per Unit
Total Fixed Cost
Fixed Budget (7,800 units)
Actual Results (7,500 units)
Sales
$ 100
 
$ 780,000
$ 766,550
Variable costs
 
 
 
 
Direct materials
35
 
273,000
277,600
Direct labor
15
 
117,000
114,100
Indirect materials
4
 
31,200
29,400
Sales commissions
11
 
85,800
81,550
Total variable costs
65
 
507,000
502,650
Contribution margin
$ 35
 
$ 273,000
$ 263,900
Fixed costs
 
 
 
 
Depreciation—Machinery
 
$ 71,050
71,050
71,050
Supervisor salary
 
42,150
42,150
43,400
Insurance
 
10,450
10,450
10,450
Depreciation—Office equipment
 
7,700
7,700
7,700
Administrative salaries
 
33,900
33,900
31,000
Total fixed costs
 
$ 165,250
165,250
163,600
Income
 
 
$ 107,750
$ 100,300

Prepare a flexible budget performance report for July at activity level of 7,500 units. Show variances between budgeted and actual amounts. (Indicate the effect of each variance by selecting favorable, unfavorable, or no variance.)

 

A manufactured product has the following information for August.
 

 
Standard Quantity and Cost
Actual Results
Direct materials
2 pounds per unit @ $6.00 per pound
 
 
Direct labor
0.5 hour per unit @ $44 per DLH
 
 
Overhead
$54 per DLH
 
 
Units manufactured
 
13,400
units
Total manufacturing costs
 
$ 808,400
 

(1) Prepare the standard cost card showing standard cost per unit.
(2) Compute total budgeted cost for production in August.
(3) Compute the total cost variance for August.

 

Lucia Company has set the following standard cost per unit for direct materials and direct labor.
 

Direct materials (15 pounds @ $5 per pound)
$ 75
Direct labor (3 hours @ $16 per hour)
48

During May the company incurred the following actual costs to produce 8,900 units.
 

Direct materials (136,200 pounds @ $4.80 per pound)
$ 653,760
Direct labor (30,300 hours @ $16.10 per hour)
487,830

AR = Actual Rate
SR = Standard Rate

AQ = Actual Quantity
SQ = Standard Quantity
AP = Actual Price
SP = Standard Price

(1) Compute the direct materials price and quantity variances.
(2) Compute the direct labor rate variance and the direct labor efficiency variance.

 

Camila Company has set the following standard cost per unit for direct materials and direct labor.
 

Direct materials (15 pounds @ $3 per pound)
$ 45
Direct labor (4 hours @ $16 per hour)
64

During June the company incurred the following actual costs to produce 8,300 units.
 

Direct materials (127,000 pounds @ $2.75 per pound)
$ 349,250
Direct labor (36,700 hours @ $16.10 per hour)
590,870

AR = Actual Rate
SR = Standard Rate

AQ = Actual Quantity
SQ = Standard Quantity
AP = Actual Price
SP = Standard Price

(1) Compute the direct materials price and quantity variances.
(2) Compute the direct labor rate variance and the direct labor efficiency variance.

 

Hart Company made 3,320 shelves using 22,320 pounds of wood costing $305,784. The company's direct materials standards for one shelf are 8 pounds of wood at $13.60 per pound.

AQ = Actual Quantity
SQ = Standard Quantity
AP = Actual Price
SP = Standard Price

1. Compute the direct materials price and quantity variances along with the total direct materials variance.
2. Hart applies management by exception by investigating direct materials variances of more than 5% of actual direct materials costs. Which direct materials variances will Hart investigate further?

 

Hart Company uses a standard costing system. Prepare the journal entry to charge direct materials costs to Work in Process Inventory and record the direct materials variances.

 

Javon Company set standards of 3 hours of direct labor per unit at a rate of $15.90 per hour. During October, the company actually uses 19,000 hours of direct labor at a $305,900 total cost to produce 6,500 units. In November, the company uses 23,000 hours of direct labor at a $371,450 total cost to produce 6,900 units of product.

AH = Actual Hours
SH = Standard Hours
AR = Actual Rate
SR = Standard Rate

(1) Compute the direct labor rate variance, the direct labor efficiency variance, and the total direct labor variance for each of these two months.
(2) Javon investigates variances of more than 5% of actual direct labor cost. Which direct labor variances will the company investigate further?

 

Manuel Company predicts it will operate at 80% of its productive capacity. Its overhead allocation base is DLH and its standard amount per allocation base is 0.5 DLH per unit. The company reports the following for this period.
 

 
Flexible Budget at 80% Capacity
Actual Results
Production (in units)
53,500
49,600
Overhead
 
 
Variable overhead
$ 294,250
 
Fixed overhead
53,500
 
Total overhead
$ 347,750
$ 351,200
1. Compute the standard overhead rate. Hint: Standard allocation base at 80% capacity is 26,750 DLH, computed as 53,500 units × 0.5 DLH per unit.
2. Compute the standard overhead applied.
3. Compute the total overhead variance. (Indicate the effect of the variance by selecting favorable, unfavorable, or no variance.)

 

(1) Compute the overhead volume variance. Indicate variance as favorable or unfavorable.
(2) Compute the overhead controllable variance. Indicate variance as favorable or unfavorable.

 

For May, Mariana company planned production of 15,200 units (80% of its production capacity of 19,000 units) and prepared the following overhead budget. The company applies overhead with a standard of 3 DLH per unit and a standard overhead rate of $3.79 per DLH.
 

Overhead Budget
80% Operating Level
Production (in units)
15,200
Budgeted overhead
 
Variable overhead costs
 
Indirect materials
$ 27,360
Indirect labor
45,600
Power
11,400
Maintenance
4,104
Total variable overhead costs
88,464
Fixed overhead costs
 
Rent of building
28,500
Depreciation—Machinery
19,000
Supervisory salaries
36,860
Total fixed overhead costs
84,360
Total overhead
$ 172,824

It actually operated at 90% capacity (17,100 units) in May and incurred the following actual overhead.
 

Actual Overhead Costs
Indirect materials
$ 27,360
Indirect labor
49,000
Power
12,825
Maintenance
9,400
Rent of building
28,500
Depreciation—Machinery
19,000
Supervisory salaries
40,000
Actual total overhead
$ 186,085

1. Compute the overhead controllable variance and identify it as favorable or unfavorable.
2. Compute the overhead volume variance and identify it as favorable or unfavorable.
3. Prepare an overhead variance report at the actual activity level of 17,100 units.

 

Mia Wiz sells computers. During May, it sold 400 computers at a $800 per unit price. The fixed budget for May predicted sales of 450 computers at an per unit price of $750.

 

AQ = Actual Quantity
SQ = Standard Quantity
AP = Actual Price
SP = Standard Price

 
1&2. Compute the sales price variance and the sales volume variance for May. Identify it as favorable or unfavorable. (Indicate the effect of each variance by selecting favorable, unfavorable, or no variance.)

 

Antuan Company set the following standard costs per unit for its product.
 

Direct materials (3.0 pounds @ $6.00 per pound)
$ 18.00
Direct labor (2.0 hours @ $12.00 per hour)
24.00
Overhead (2.0 hours @ $18.50 per hour)
37.00
Standard cost per unit
$ 79.00

The standard overhead rate ($18.50 per direct labor hour) is based on a predicted activity level of 75% of the factory’s capacity of 20,000 units per month. Following are the company’s budgeted overhead costs per month at the 75% capacity level.
 

Overhead Budget (75% Capacity)
Variable overhead costs
 
Indirect materials
$ 30,000
Indirect labor
75,000
Power
30,000
Maintenance
30,000
Total variable overhead costs
165,000
Fixed overhead costs
 
Depreciation—Building
23,000
Depreciation—Machinery
72,000
Taxes and insurance
16,000
Supervisory salaries
279,000
Total fixed overhead costs
390,000
Total overhead costs
$ 555,000
 
The company incurred the following actual costs when it operated at 75% of capacity in October.
 

Direct materials (46,000 pounds @ $6.10 per pound)
 
$ 280,600
Direct labor (20,000 hours @ $12.30 per hour)
 
246,000
Overhead costs
 
 
Indirect materials
$ 41,750
 
Indirect labor
176,650
 
Power
34,500
 
Maintenance
34,500
 
Depreciation—Building
23,000
 
Depreciation—Machinery
97,200
 
Taxes and insurance
14,400
 
Supervisory salaries
279,000
701,000
Total costs
 
$ 1,227,600
Required:
1. Prepare flexible overhead budgets for October showing amounts of each variable and fixed cost at the 65%, 75%, and 85% capacity levels.

 

2. Compute the direct materials variance, including its price and quantity variances. (Indicate the effect of each variance by selecting favorable, unfavorable, or no variance.)

 

3. Compute the direct labor variance, including its rate and efficiency variances. (Indicate the effect of each variance by selecting favorable, unfavorable, or no variance. Round "Rate per hour" answers to two decimal places.)

 

4. Prepare a detailed overhead variance report that shows the variances for individual items of overhead. (Indicate the effect of each variance by selecting favorable, unfavorable, or no variance.)