Chow-4-Hounds (C4H) makes pet food for sale in supermarkets. C4H produces two general types: Branded and Generic. The two differ primarily in the ingredients used. At budget, Branded sells for $32 per case and has a variable cost to produce of $25 per case. Generic sells for a budgeted $29 per case and has a budgeted variable cost to produce of $24 per case. C4H expects to sell 20 percent Branded and 80 percent Generic regardless of the sales volume. C4H budgeted total sales of 220,000 cases for March. Actual case volume sold in March was 250,000 cases, of which 70,000 were Branded. Total actual revenues in March were $2,075,000, of which $790,000 were from sales of Branded cases. Required: a. Compute the activity variance for C4H for March. b. Compute the mix and quantity variances for March.

Chow-4-Hounds (C4H) makes pet food for sale in supermarkets. C4H produces two general types: Branded and Generic. The two differ primarily in the ingredients used. At budget, Branded sells for $32 per case and has a variable cost to produce of $25 per case. Generic sells for a budgeted $29 per case and has a budgeted variable cost to produce of $24 per case. C4H expects to sell 20 percent Branded and 80 percent Generic regardless of the sales volume. C4H budgeted total sales of 220,000 cases for March. Actual case volume sold in March was 250,000 cases, of which 70,000 were Branded. Total actual revenues in March were $2,075,000, of which $790,000 were from sales of Branded cases. Required: a. Compute the activity variance for C4H for March. b. Compute the mix and quantity variances for March.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter9: Profit Planning And Flexible Budgets

Section: Chapter Questions

Problem 69P: Use the following information for Problems 9-67 through 9-69: Ladan Suriman, controller for Healthy...

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Use the following information for Problems 9-67 through 9-69: Ladan Suriman, controller for Healthy Pet Company, has been instructed to develop a flexible budget for overhead costs. The company produces two types of dog food. BasicDiet is a standard mixture for healthy dogs. SpecialDiet is a reduced protein formulation for older dogs with health problems. The two dog foods use common raw materials in different proportions. The company expects to produce 80,000 bags of each product during the coming year. BasicDiet requires 0.20 direct labor hour per bag, and SpecialDiet requires 0.30 direct labor hour per bag. Ladan has developed the following fixed and variable costs for each of the four overhead items: Problem 9-67 Overhead Budget for a Particular Level of Activity Refer to the information for Healthy Pet Company above. Required: 1. Calculate the total direct labor hours required for the production of 80,000 bags of BasicDiet and 80,000 bags of SpecialDiet. 2. Prepare an overhead budget for the expected activity level (calculated in Requirement 1) for the coming year.
Use the following information for Problems 9-67 through 9-69: Ladan Suriman, controller for Healthy Pet Company, has been instructed to develop a flexible budget for overhead costs. The company produces two types of dog food. BasicDiet is a standard mixture for healthy dogs. SpecialDiet is a reduced protein formulation for older dogs with health problems. The two dog foods use common raw materials in different proportions. The company expects to produce 80,000 bags of each product during the coming year. BasicDiet requires 0.20 direct labor hour per bag, and SpecialDiet requires 0.30 direct labor hour per bag. Ladan has developed the following fixed and variable costs for each of the four overhead items: Problem 9-69 Performance Report Based on Actual Production Refer to the information for Healthy Pet Company on the previous page. Assume that Healthy Pet actually produced 100,000 bags of BasicDiet and 90,000 bags of SpecialDiet. The actual overhead costs incurred were as follows: Required: 1. Calculate the number of direct labor hours budgeted for actual production of the two products. 2. Prepare a performance report for the period based on actual production. 3. CONCEPTUAL CONNECTION Based on the report, would you judge any of the variances to be significant? Can you think of some possible reasons for the variances?
Cloud Shoes manufactures recovery sandals and is planning on producing 12.000 units in March and 11,500 in April. Each sandal requires 1.2 yards if material, which costs $3.00 per yard. The companys policy is to have enough material on hand to equal 15% of next months production needs and to maintain a finished goods inventory equal to 20% of the next months production needs. What is the budgeted cost of purchases for March?
Jansen Crafters has the capacity to produce 50,000 oak shelves per year and is currently selling 44,000 shelves for $32 each. Cutrate Furniture approached Jansen about buying 1,200 shelves for bookcases it is building and is willing to pay $26 for each shelf. No packaging will be required for the bulk order. Jansen usually packages shelves for Home Depot at a price of $1.50 per shell. The $1.50 per-shelf cost is included in the unit variable cost of $27, with annual fixed costs of $320.000. However, the $130 packaging cost will not apply in this case. The fixed costs will be unaffected by the special order and the company has the capacity to accept the order. Based on this information, what would be the profit if Jansen accepts the special order? A. Profits will decrease by $1,200. B. Profits will increase by $31,200. C. Profits will increase by $600. D. Profits will increase by $7,200.
Allonby Foods processes frozen meals for sale in grocery and other retail outlets. Two versions are produced: The FlavorPak version has a budgeted price of $16 per case and a standard variable cost of $9 per case. The Gourmet version has a budgeted price of $29 per case and a standard variable cost of $18 per case. At the beginning of the year, the Marketing Group at Allonby estimated that the company would sell 60,300 cases of the FlavorPak version and 36,180 cases of the Gourmet version. The actual results for the year showed that 57,000 cases of the FlavorPak version and 38,000 cases of the Gourmet version were sold. Total revenues generated by sales of both versions amounted to $2,013,950 with $1,078,400 coming from the Gourmet version sales. Required:a. Compute the sales activity variance for the year.b. Compute the mix and quantity variances for the year.
SAPE Ltd. manufactures speciality meat pies, which it sells in bulk to delicatessen shops. The only variable cost is raw material, which consists of three grades of raw meat. The standard cost of the raw materials used in the manufacture of each 100 kilograms of speciality meat pie is as follows: Raw material Kilograms Standard Price per kilogram Type A 25 K2 Type B 60 K3 Type C 40 K4 Total Input 125 Normal loss [20% of input] 25 Output 100 In preparing its budget for 2022, the company assumed that there would be a market in Ireland for 125,000 kilograms of speciality meat pie and that SAPE’s product would have a 40% share of this market. The budget also assumed a selling price of K6 per kilogram for SAPE’s product. However, during 2022 both SAPE and its competitors were adversely affected by diminishing consumer confidence in meat products. The actual total market size was only 110,000 kilograms of speciality…
Ladan Suriman, controller for Healthy Pet Company, has been instructed to develop a flexible budget for overhead costs. The company produces two types of dog food. BasicDiet is a standard mixture for healthy dogs. SpecialDiet is a reduced protein formulation for older dogs with health problems. The two dog foods use common raw materials in different proportions. The company expects to produce 80,000 bags of each product during the coming year. BasicDiet requires 0.20 direct labor hour per bag, and SpecialDiet requires 0.30 direct labor hour per bag. Ladan has developed the following fixed and variable costs for each of the four overhead items: Overhead Item Fixed Cost Variable Rate per DirectLabor Hour Maintenance $ 57,250 $0.50 Power 0.40 Indirect labor 43,500 2.10 Rent 39,000 Required: 1. Calculate the total direct labor hours required for the production of 80,000 bags of…
Ladan Suriman, controller for Healthy Pet Company, has been instructed to develop a flexible budget for overhead costs. The company produces two types of dog food. BasicDiet is a standard mixture for healthy dogs. SpecialDiet is a reduced protein formulation for older dogs with health problems. The two dog foods use common raw materials in different proportions. The company expects to produce 80,000 bags of each product during the coming year. BasicDiet requires 0.20 direct labor hour per bag, and SpecialDiet requires 0.30 direct labor hour per bag. Ladan has developed the following fixed and variable costs for each of the four overhead items: Overhead Item Fixed Cost Variable Rate per DirectLabor Hour Maintenance $ 57,250 $0.50 Power 0.40 Indirect labor 43,500 2.10 Rent 39,000 Assume that Healthy Pet actually produced 100,000 bags of BasicDiet and 90,000 bags of SpecialDiet. The…
Beacon Novelties manufactures frisbees that it sells to other companies for customizing with their own logos. Beacon prepares flexible budgets and uses a standard cost system to control manufacturing costs. The standard unit cost of a frisbee is based on static budget volume of 60,000 frisbees per month: Direct Materials (.2 @ $.30 per lb.) .06 Direct Labor (4 mins. @ $.15 per min.) .60 Manufacturing Overhead: Variable (4 mins. @ $.07 per min.) .28 Fixed (4 mins. @ $.16 per min.) .64 .92 Total cost per unit $1.58 Actual cost and production information for June 2019 follows: a. There were no beginning or ending inventory balances. All expenditures were on account. b. Actual production and sales were 62,000 frisbees. c. Actual direct materials usage was 10,000 lbs. at an actual cost of $0.24 per lb. d. Actual direct labor usage was 208,000 minutes at a total cost of $37,440. e. Actual overhead cost was $8,000 variable and $30,000 fixed. f. Selling and administrative costs were…
Stenback manufactures coffee mugs that it sells to other companies for customizing with their own logos. Stenback prepares flexible budgets and uses a standard cost system to control manufacturing costs. The standard unit cost of a coffee mug is based on static budget volume of 60,200 coffee mugs per month: Direct Materials (0.2 lbs @ $0.25 per lb) $0.05 Direct Labor (3 minutes @ $0.10 per minute) 0.30 Manufacturing Overhead: Variable (3 minutes @ $0.06 per minute) $0.18 Fixed (3 minutes @ $0.13 per minute) 0.39 0.57 Total Cost per Coffee Mug $0.92 a.There were no beginning or ending inventory balances. All expenditures were on account. b.Actual production and sales were 62,900 coffee mugs. c. Actual direct materials usage was 10,000 lbs. at an actual cost of $0.17 per lb. d. Actual direct labor usage was 202,000 minutes at a total cost of $24,240. e. Actual overhead cost was $10,100 variable and $30,800 fixed. f. Selling and administrative costs were $131,000. Select the…
Chick-Fil-A is Why I’m Always Over Budget (COB) is trying to decide the best use of its time on the assembly line. Chicken nuggets require 1 labor hour each, but chicken strips require 3 labor hours each. Chicken nuggets sell for $42 with a variable cost of $20. Chicken strips sell for $57 with a variable cost of $24. Calculate the following: What is the contribution margin per assembly line hour for chicken strips?
Chick-Fil-A is Why I’m Always Over Budget (COB) is trying to decide the best use of its time on the assembly line. Chicken nuggets require 1 labor hour each, but chicken strips require 3 labor hours each. Chicken nuggets sell for $42 with a variable cost of $20. Chicken strips sell for $57 with a variable cost of $24. Calculate the following: What is the unit contribution margin per assembly line hour for chicken nuggets?