Managerial Accounting (5th Edition)
5th Edition
ISBN: 9780134128528
Author: Karen W. Braun, Wendy M. Tietz
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Textbook Question
Chapter 10, Problem 10.25AE
Comprehensive flexible budget problem (Learning Objectives 2 & 5)
The Happy Balloon Company produces party balloons that are sold in multi-pack cases. To follow is the company’s performance report in contribution margin format for August:
10.2-18 Full Alternative Text
Requirements
- 1. What is the budgeted sales price per unit?
- 2. What is the budgeted variable expense per unit?
- 3. What is the budgeted fixed cost for the period?
- 4. Compute the
master budget variances. Be sure to indicate each variance as favorable (F) or unfavorable (U). - 5. Management would like to determine the portion of the master
budget variance that is (a) due to volume being different than originally anticipated and (b) due to some other unexpected cause. Prepare a flexible budget performance report to address these questions, using the actual sales volume of 60,000 units and the budgeted sales volume of 55,000 units. Use the original budget assumptions for sales price, variable cost per unit, and fixed costs, assuming the relevant range stretches from 50,000 to 75,000 units. - 6. Using the flexible budget performance report you prepared for Requirement 5, answer the following questions:
- a. How much of the master budget variance (calculated in Requirement 4) for operating income is due to volume being higher than expected?
- b. How much of the master budget variance for variable expenses is due to some cause other than volume?
- c. What could account for the flexible budget variance for sales revenue?
- d. What is the volume variance for fixed expenses? Why is it this amount?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
LearnCo
PARAGRAPH IS FOR ASSISTANCE TO HELP WITH THE QUESTIONS IN THE IMAGES ONLY WANT THE IMAGES ANWSERED
LearnCo manufactures and sells one product, an abacus for classroom use, with two models, the Basic model and the Deluxe model. The company began operations on January 1, 20Y1, and is planning for 20Y2, its second year of operations, by preparing budgets from its master budget.
The company is trying to decide how many units to manufacture, how much it might spend on direct materials and direct labor, and what their factory overhead expenses might be. In addition, the company is interested in budgeting for selling and administrative costs, and in creating a budgeted income statement showing a prediction of net income for 20Y2.
You have been asked to assist the controller of LearnCo in preparing the 20Y2 budgets.
Sales Budget
The sales budget often uses the prior year’s sales as a starting point, and then sales quantities are revised for various factors such as planned advertising…
Question Content Area
I AM NEEDING THE PICTURES ANWSERED THE PASSAGE IS JUST FOR ASSISTANCE TO ANSWER THE QUESTIONS
Question Content Area
LearnCo
LearnCo manufactures and sells one product, an abacus for classroom use, with two models, the Basic model and the Deluxe model. The company began operations on January 1, 20Y1, and is planning for 20Y2, its second year of operations, by preparing budgets from its master budget.
The company is trying to decide how many units to manufacture, how much it might spend on direct materials and direct labor, and what their factory overhead expenses might be. In addition, the company is interested in budgeting for selling and administrative costs, and in creating a budgeted income statement showing a prediction of net income for 20Y2.
You have been asked to assist the controller of LearnCo in preparing the 20Y2 budgets.
Sales Budget
The sales budget often uses the prior year’s sales as a starting point, and then sales quantities are revised…
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).
Chapter 10 Solutions
Managerial Accounting (5th Edition)
Ch. 10 - (Learning Objective 1) Companies often...Ch. 10 - (Learning Objective 1) Which of the following is...Ch. 10 - (Learning Objective 1) In terms of responsibility...Ch. 10 - (Learning Objective 2) Which of the following is...Ch. 10 - (Learning Objective 2) A segment margin is the...Ch. 10 - Prob. 6QCCh. 10 - Prob. 7QCCh. 10 - Prob. 8QCCh. 10 - Prob. 9QCCh. 10 - Prob. 10QC
Ch. 10 - Identify and understand responsibility centers...Ch. 10 - Identify types of responsibility centers (Learning...Ch. 10 - Identify centralized and decentralized...Ch. 10 - Prob. 10.4SECh. 10 - Prob. 10.5SECh. 10 - Prob. 10.6SECh. 10 - Calculate ROI (Learning Objective 3) Refer to Epic...Ch. 10 - Prob. 10.8SECh. 10 - Prob. 10.9SECh. 10 - Prob. 10.10SECh. 10 - Prob. 10.11SECh. 10 - Interpret a performance report (Learning Objective...Ch. 10 - Prob. 10.13SECh. 10 - Classify KPIs by balanced scorecard perspective...Ch. 10 - Use vocabulary terms (Learning Objectives 1, 2, 3,...Ch. 10 - Prob. 10.16SECh. 10 - Identify type of responsibility center (Learning...Ch. 10 - Complete and analyze a performance report...Ch. 10 - Prepare a segment margin performance report...Ch. 10 - Compute and interpret the expanded ROI equation...Ch. 10 - Prob. 10.21AECh. 10 - Prob. 10.22AECh. 10 - Comparison of ROI and residual income (Learning...Ch. 10 - Prob. 10.24AECh. 10 - Comprehensive flexible budget problem (Learning...Ch. 10 - Prepare a flexible budget performance report...Ch. 10 - Work backward to find missing values (Learning...Ch. 10 - Construct a balanced scorecard (Learning Objective...Ch. 10 - Sustainability and the balanced scorecard...Ch. 10 - Identify type of responsibility center (Learning...Ch. 10 - Complete and analyze a performance report...Ch. 10 - Prob. 10.32BECh. 10 - Prob. 10.33BECh. 10 - Prob. 10.34BECh. 10 - Prob. 10.35BECh. 10 - Prob. 10.36BECh. 10 - Prob. 10.37BECh. 10 - Prob. 10.38BECh. 10 - Prob. 10.39BECh. 10 - Prob. 10.40BECh. 10 - Prob. 10.41BECh. 10 - Sustainability and the balanced scorecard...Ch. 10 - Prepare a budget with different volumes for...Ch. 10 - Prepare and interpret a performance report...Ch. 10 - Prob. 10.45APCh. 10 - Prob. 10.46APCh. 10 - Prob. 10.47APCh. 10 - Evaluate subunit performance (Learning Objectives...Ch. 10 - Prob. 10.49BPCh. 10 - Prob. 10.50BPCh. 10 - Evaluate divisional performance (Learning...Ch. 10 - Prob. 10.52BPCh. 10 - Determine transfer price at a manufacturer under...Ch. 10 - Evaluate subunit performance (Learning Objectives...Ch. 10 - Prob. 10.55SC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Roberds Tech 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 $ 298 $ 0 Faculty wages $ 0 $ 0 $ 3,100 Course supplies $ 0 $ 52 $ 40 Administrative expenses $ 26,500 $ 27 $ 52 In March, the school budgeted for 1,910 students and 88 courses. The school's income statement showing the actual results for the month appears below: Roberds Tech Income Statement For the Month Ended March 31 Actual students 1,810 Actual courses 91 Revenue $ 411,340 Expenses: Faculty wages 214,950 Course supplies 62,590 Administrative expenses 84,562 Total expense 362,102 Net operating income $ 49,238 Required: Prepare a flexible budget performance report showing both the school's activity variances and revenue and spending…arrow_forwardScholar Suppliers manufactures backpacks for students. The backpacks come in two sizes: Small, and Large. Scholar Suppliers anticipates the following sales volumes and prices for the coming period: Size Sales Volume Selling Price Small 3,000 backpacks $25 each Large 6,000 backpacks $75 each What is the budgeted level of revenue for the coming period?arrow_forward(J) Citations are required for this exercise. Comments to other students must be detailed and substantive. Alpaca Industries, located in the beauty pacific Northwest, manufactures a household electronic device. The company is fairly small with revenues and total assets of approximately $370,000 and $300,000, respectively. The company has never maintained a budget since its inception, and as a new hire, you are eager to create a budget for the company. Write a 1-page memo, explaining to the owner the advantages of budgeting. In your memo, provide exact page number citations. Please note that any responses without citations will not be graded. Only the original responses are graded; subsequent edits are not graded.arrow_forward
- this is actually a budgeting lesson. Beginning inventory 4.000 unit Ending inventory 3.500 unit The lack will be allocated to the 5 months (Jan, Feb, March, April dan May). Arrange production budget with a policy that accentuate production stability!arrow_forwardSanchez Corporation manufactures tables for schools. The 2023 operating budget is based on sales of 100,000 units at $500 per table. Budgeted variable costs are $350 per unit, while fixed costs total $6,000,000. For 2023, actual sales were 110,000 units at $490 each. Actual variable costs were $360 per unit and fixed costs totaled $5,800,000. Required: a) Prepare a report showing actual results, a static budget and a flexible budget. b) Explain the significance of a flexible budget versus a static budget.arrow_forwardMULTI COLORED PICTURE ATTACHED IS THE PART I NEED HELP WITH SECOND IS PART OF THE INFORMATION GIVEN WITH THE QUESTION The Grady Tire Company manufactures racing tires for bicycles. Grady sells tires for $70 each. Grady is planning for the next year by developing a master budget by quarters. Grady's balance sheet for Decembe 31,2018, follows: a. Budgeted sales are 1,800 tires for the first quarter and expected to increase by 50 tires per quarter. Cash sales are expected to be 20% of total sales, with the remaining 80% of sales on account. b. Finished Goods Inventory on December 31, 2018 consists of 100 tires at $36 each. c. Desired ending Finished Goods Inventory is 50% of the next quarter's sales; first quarter sales for 2020 are expected be 2,000 tires. FIFO inventory costing method is used. d. Raw Materials Inventory on December 31, 2018, consists of 200 pounds of rubber compound used to manufacture the tires. e. Direct materials requirements are 2 pounds of a rubber compound…arrow_forward
- 1. What is the total budgeted indirect cost at the Elmore store in January 2018? What is the total budgeted cost of each activity at the Elmore store for January 2018? What is the budgeted indirect cost of each product category for January 2018? 2. Which product category has the largest fraction of total budgeted indirect costs? 3. Given your answer in requirement 2, what advantage does Maclin's Corner gain by using an activity-based approach to budgeting over, say, allocating indirect costs to products based on cost of goods sold?arrow_forwardPreparing a flexible budget Use the information in Figure 7-12 of the chapter. Required: Prepare flexible budgets for the production and sale of 29,000 units and 31,000 units, respectively.arrow_forward1. Question Content Area Direct Materials Purchases Budget FlashKick Company manufactures and sells soccer balls for teams of children in elementary and high school. FlashKick’s best-selling lines are the practice ball line (durable soccer balls for training and practice) and the match ball line (high-performance soccer balls used in games). In the first four months of next year, FlashKick expects to sell the following: Practice Balls Match Balls Units Selling Price Units Selling Price January 49,000 $8.50 6,900 $17.30 February 60,000 $8.50 7,500 $17.30 March 88,000 $8.50 12,000 $17.30 April 115,000 $8.50 17,000 $17.30 FlashKick requires ending inventory of product to equal 20 percent of the next month’s unit sales. Beginning inventory in January was 9,800 practice soccer balls and 1,380 match soccer balls. Every practice ball requires 0.7 square yard of polyvinyl chloride panels, one bladder with valve (to fill with air), and 2…arrow_forward
- Prepare a 12-month Master Budget for a company of your choosing. It can be a company that you are closely connect too or one randomly selected. COMPLETED IN EXCEL. As you are preparing the Master Budget, some information is NOT provided. You are required to decide or predict or forecast this information. Provide an introduction for the company you have chosen. The introduction should include the following: Name of company Location of company Name of owner Nature of the business. Type of product Fiscal period For the company that you have selected - Prepare a 12-month Master Budget. Your submission must show each month’s activities. Here are some considerations to include in preparing the budget: You must forecast your sales, purchases, direct labour and manufacturing overhead for each month and any other information as required All sales are on accounts Expected collections are to be 50% in the month of the sale, 30 % in the first month following the sale, and 20% in the second…arrow_forwardRefer to the information regarding Stillwater Designs above.Required:1. Prepare a sales budget for each quarter of 20X1 and for the year in total. Show sales byproduct and in total for each time period.2. CONCEPTUAL CONNECTION How will Stillwater Designs use this sales budget?arrow_forwardPrepare a Flexible Budget Performance Report Vulcan Flyovers offers scenic overflights of Mount St. Helens, the volcano in Washington State that explosively erupted in 1982. Data concerning the company’s operations in July appear below: The company measures its activity in terms of flights. Customers can buy individual tickets for overflights or hire an entire plane for an overflight at a discount. Required: 1. Using Exhibit 9–8 as your guide, prepare a flexible budget performance report for July that includes revenue and spending variances and activity variances. 2. Which of the variances should be of concern to management? Explain. Exhibit 9–8 Performance Report Combining Activity Variances with Revenue and Spending Variancesarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage LearningPrinciples of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Principles of Cost Accounting
Accounting
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Cengage Learning
Responsibility Accounting| Responsibility Centers and Segments| US CMA Part 1| US CMA course; Master Budget and Responsibility Accounting-Intro to Managerial Accounting- Su. 2013-Prof. Gershberg; Author: Mera Skill; Rutgers Accounting Web;https://www.youtube.com/watch?v=SYQ4u1BP24g;License: Standard YouTube License, CC-BY