EZ-Tax is a tax accounting practice with partners and staff members. Each billable hour of partner time has a $510 budgeted price and S230 budgeted variable cost. Each billable hour of staff time has a budgeted price of S140 and a budgeted variable cost of S70. For the most recent year, the partnership budget called for 8,900 billable partner-hours and 33,750 staff-hours. Actual results were as follows. Partner revenue S 4,174,000 8,400 hours Staff revenue S 4,650,000 33,000 hours Required: a. Compute the sales price variance. b. Compute the total sales activity variance. c. Compute the total sales mix variance. d. Compute the total sales quantity variance. (For all requirements, do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. Enter your answers rounded to the nearest whole dollar)

EZ-Tax is a tax accounting practice with partners and staff members. Each billable hour of partner time has a $510 budgeted price and S230 budgeted variable cost. Each billable hour of staff time has a budgeted price of S140 and a budgeted variable cost of S70. For the most recent year, the partnership budget called for 8,900 billable partner-hours and 33,750 staff-hours. Actual results were as follows. Partner revenue S 4,174,000 8,400 hours Staff revenue S 4,650,000 33,000 hours Required: a. Compute the sales price variance. b. Compute the total sales activity variance. c. Compute the total sales mix variance. d. Compute the total sales quantity variance. (For all requirements, do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. Enter your answers rounded to the nearest whole dollar)

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter12: Activity-based Management

Section: Chapter Questions

Problem 4CE: Foy Company has a welding activity and wants to develop a flexible budget formula for the activity....

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Foy Company has a welding activity and wants to develop a flexible budget formula for the activity. The following resources are used by the activity: Four welding units, with a lease cost of 12,000 per year per unit Six welding employees each paid a salary of 50,000 per year (A total of 9,000 welding hours are supplied by the six workers.) Welding supplies: 300 per job Welding hours: Three hours used per job During the year, the activity operated at 90 percent of capacity and incurred the actual activity and resource costs, shown on page 676. Lease cost: 48,000 Salaries: 315,000 Parts and supplies: 805,000 Required: 1. Prepare a flexible budget formula for the welding activity using welding hours as the driver. 2. Prepare a performance report for the welding activity. 3. What if welders were hired through outsourcing and paid 30 per hour (the welding equipment is provided by Foy)? Repeat Requirement 1 for the outsourcing case.
EZ-Tax is a tax accounting practice with partners and staff members. Each billable hour of partner time has a $550 budgeted price and $270 budgeted variable cost. Each billable hour of staff time has a budgeted price of $130 and a budgeted variable cost of $60. For the most recent year, the partnership budget called for 7,900 billable partner-hours and 35,700 staff-hours. Actual results were as follows. Partner revenue $ 4,025,000 7,500 hours Staff revenue $ 4,580,000 35,000 hours d. Compute the total sales quantity variance.
EZ-Tax is a tax accounting practice with partners and staff members. Each billable hour of partner time has a $550 budgeted price and $270 budgeted variable cost. Each billable hour of staff time has a budgeted price of $130 and a budgeted variable cost of $60. For the most recent year, the partnership budget called for 7,900 billable partner-hours and 35,700 staff-hours. Actual results were as follows. Partner revenue $ 4,025,000 7,500 hours Staff revenue $ 4,580,000 35,000 hours Required: a. Compute the sales price variance. b. Compute the total sales activity variance. c. Compute the total sales mix variance.
Nafiz Associates is an accounting firm that provides audit, tax and accounting services. The 2021 budgeted Income statement for the firm is as follows Service revenue $200,000 Professional labor cost (direct) $60,000 Client support cost (indirect) $90,000 Operating income $50,000 The indirect costs are allocated to the service using professional labor cost as the allocation base and the target profit is 25% of the price. 1.Compute the budgeted indirect cost allocation rate
PwC, a local accounting firm, employs 25 full-time tax professionals. The budgeted annual compensation per employee is $50,000. The average chargeable time per client annually is 380 hours. Indirect costs are allocated according to professional labor-hours. Budgeted indirect costs for the year are $521,000 and the firm expects to have 80 clients during the coming year. Required: a) What is the budgeted indirect cost rate per hour? b) If 8 clients leave and the workforce stays at 25 employees, what is PwC's new indirect cost rate per hour?
The partnership of GENO and PEARLS is into manufacturing. In the course of the entity’s budgeting process for the quarter, the following information were into consideration:· Sales for the second quarter of the calendar year is seen to be at 10,000 units, 15,000 units, and 12,000 units. However, budgeted sales for May might go up to 20,000 units depending on further analysis of fixed costs and outside market forces. If fixed costs go down and favorable market forces are seen, the increase in sales will proceed in the budget preparation.· The entity wants to maintain 4,000 units as ending inventory every month for the whole year. Each unit of inventory requires 3 lbs. of direct materials, 2 hours of direct labor, and P12 worth of overhead per unit. Direct materials is P10 per pound and labor is P24 per hour.· All operating expenses is estimated to be at 40% of gross profit, giving respect to the potential changes in costs and expenses. Tax rate is 25%.· It…
David & Cooper, a consulting firm, specializes in providing internal audit services for its clients. It bills the clients $156 per hour for its professional services; it costs the firm $81 per hour to cover the cost of its staff. To cover its MOH costs, the partners have always applied MOH costs to clients based on total direct labor hours. At the beginning of the year, they budgeted for 8,100 direct labor hours and $150,660 of MOH costs.In the current year, the firm’s professional staff worked on three key client projects: All Ways, Inc., for 2,600 hours; My Way, Inc., for 2,100 hours; and High Way, Inc., for 4,300 hours. These clients were billed for this work by the end of the year.Naturally, there were other costs incurred to run the firm, including sales and marketing costs, which added up to $126,000 this year. Actual MOH costs for the year totaled $136,000. Prepare an income statement for the firm for the current year. select an income statement item…
David & Cooper, a consulting firm, specializes in providing internal audit services for its clients. It bills the clients $156 per hour for its professional services; it costs the firm $81 per hour to cover the cost of its staff. To cover its MOH costs, the partners have always applied MOH costs to clients based on total direct labor hours. At the beginning of the year, they budgeted for 8,100 direct labor hours and $150,660 of MOH costs.In the current year, the firm’s professional staff worked on three key client projects: All Ways, Inc., for 2,600 hours; My Way, Inc., for 2,100 hours; and High Way, Inc., for 4,300 hours. These clients were billed for this work by the end of the year.Naturally, there were other costs incurred to run the firm, including sales and marketing costs, which added up to $126,000 this year. Actual MOH costs for the year totaled $136,000. Show the effects of the labor and MOH costs through T-accounts for the company’s inventory and Cost of Sales accounts.…
Render Co. CPA is preparing activity-based budgets for 2019. The partners expect the firm to generate billable hours for the year as follows. Data entry . . . . . . . . . . . 2,200 hours Auditing 4,800 hours Tax 4,300 hours Consulting 750 hours The company pays $15 per hour to data-entry clerks, $30 per hour to audit personnel, $40 per hour to tax personnel, and $50 per hour to consulting personnel. Prepare a schedule of budgeted labor costs for 2019 using activity-based budgeting.
Carlos Consulting Inc. provides financial consulting and has collected the following datafor the next year's budgeted activity for a lead consultant.Consultants' wages $90,000Fringe benefits $22,500Related overhead $17,500Supply clerk's wages $18,000Fringe benefits $4,000Related overhead $20,000Profit margin per hour $20Profit margin on materials 15%Total estimated consulting hours 5,000Total estimated material costs $168,000The material loading charge is
Pinnacle Consulting employs two CPAs, each having a different area of specialization. Judy specializes in tax consulting and Steve specializes in management consulting. Pinnacle expects to incur total overhead costs of $419,400 during the year and applies overhead based on annual salary costs. Judy is a senior partner, her annual salary is $225,000, and she is expected to bill 2,200 hours during the year. Steve is a senior associate, his annual salary is $124,500, and he is expected to bill 1,500 hours during the year. Required: Calculate the predetermined overhead rate. Assuming that the hourly billing rate should be set to cover the total cost of services plus a 25% markup, compute the hourly billing rates for Judy and Steve.
ShawnTech is a for-profit vocational school. The school bases its budgets on two measures of activity (i.e., cost drivers), namely student and course. The school uses the following data in its budgeting: Fixed element per month variable element per student variable element per course revenue $0 $354 $0 faculty wages $0 $0 $2,300 course supplies $0 $48 $40 administrative expenses $41,700 $13 $21 In October, the school budgeted for 1,400 students and 127 courses. The actual activity for the month was 1,500 students and 129 courses. Prepare a report showing the school's activity variances for October. Label each variance as favorable (F) or unfavorable (U).