Activity 1 Tyson's Hardware uses a flexible budget to develop planning information for its warehouse operations. For 20x3, the company anticipated that it would have 96,000 sales units for 664 customer shipments. Average storage bin usage for various inventories was estimated to be 200 per day. The costs and cost drivers were determined to be as follows: Cost driver per 100 units per storage bin per 100 units per shipment per shipment Fixed P10,000 Variable P1.25 Item Product handling Storage Utilities Shipping clerks Supplies 3.00 1.50 1.00 0.50 1,000 1,000 During the year, the warehouse processed 90,000 units for 600 customer shipments. The workers used 225 storage bins on average each day to sort, store, and process goods for shipment. The actual costs for 20x3 were: Item Product handling Storage Utilities Shipping clerks Supplies Actual costs P10,900 465 2,020 1,400 340 Required: a. Prepare a static budget for 20x3 with static-budget variances. b. Prepare a flexible budget for 20x3 with flexible-budget variances.

Activity 1 Tyson's Hardware uses a flexible budget to develop planning information for its warehouse operations. For 20x3, the company anticipated that it would have 96,000 sales units for 664 customer shipments. Average storage bin usage for various inventories was estimated to be 200 per day. The costs and cost drivers were determined to be as follows: Cost driver per 100 units per storage bin per 100 units per shipment per shipment Fixed P10,000 Variable P1.25 Item Product handling Storage Utilities Shipping clerks Supplies 3.00 1.50 1.00 0.50 1,000 1,000 During the year, the warehouse processed 90,000 units for 600 customer shipments. The workers used 225 storage bins on average each day to sort, store, and process goods for shipment. The actual costs for 20x3 were: Item Product handling Storage Utilities Shipping clerks Supplies Actual costs P10,900 465 2,020 1,400 340 Required: a. Prepare a static budget for 20x3 with static-budget variances. b. Prepare a flexible budget for 20x3 with flexible-budget variances.

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter7: The Master Budget And Flexible Budgeting

Section: Chapter Questions

Problem 4P

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Refer to Exercise 8.27. At the end of the year, Meliore, Inc., actually produced 310,000 units of the standard model and 115,000 of the deluxe model. The actual overhead costs incurred were: Required: Prepare a performance report for the period. In an attempt to improve budgeting, the controller for Meliore, Inc., has developed a flexible budget for overhead costs. Meliore, Inc., makes two types of products, the standard model and the deluxe model. Meliore expects to produce 300,000 units of the standard model and 120,000 units of the deluxe model during the coming year. The standard model requires 0.05 direct labor hour per unit, and the deluxe model requires 0.08. The controller has developed the following cost formulas for each of the four overhead items: Required: 1. Prepare an overhead budget for the expected activity level for the coming year. 2. Prepare an overhead budget that reflects production that is 10 percent higher than expected (for both products) and a budget for production that is 20 percent lower than expected.
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