1.
Introduction: Total variable costs have a direct relationship with the activity base. It increases or decreases in approximate proportion to increase or decrease in the activity base respectively. Variable costs per unit do not change with the change in activity base. The reason is that total variable costs positively change in approximate proportion to a change in an activity. That is why variable costs per unit remain the same at any level of output.
The variable cost charged to Northern Plant and Southern Plant.
2.
Introduction: Total fixed costs do not change with the change in activity base provided that activities are performed within the relevant range. Fixed costs are period costs such as rent, interest on loans, and
The fixed costs charged to Northern Plant and Southern Plant.
3.
Introduction: Spending variance shows the relationship between the budgeted cost and the actual cost incurred. If the budgeted cost is more than the actual cost incurred, then it is termed a favorable spending variance and vice versa.
The amount of spending variance which is not charged to the plants.
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Chapter 11 Solutions
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- Automatic Irrigation, Inc. is preparing its manufacturing overhead budget for the next year. Relevant data consist of the following Qtr. 1 Qtr. 2 Qtr. 3 Qtr. 4 Total Control Units to be produced (by quarters): 8,000 7,000 10,000 12,000 37,000 Direct labor time: 1 hour per unit Variable overhead costs per direct labor hour: Indirect Materials $0.80; Indirect Labor $1.10; and Maintenance $0.60. Fixed overhead costs per quarter: Supervisory salaries $19,250; depreciation $3,000; and maintenance $2,250. Required Prepare the manufacturing overhead budget for the next year showing quarterly data and the total amounts for the full year.arrow_forwardTask 6. The following are consumed for the production of one unit: ➤18 kg of material A (price 1 € / kg and 3 m²) material B (price 2 € / m²) Direct labour per unit of product Responsibility centre 1: 20 hours; rate 0,30€/h ==== Responsibility centre 2: 30 hours; rate 0,50€/h Calculates: Estimated (planned) variable overheads per year Responsibility centre 1: 14,000, € Direct labour 70,000 h Responsibility centre 2: 21 000, € Direct labour 180 000 h 1. variable production costs per unit 2. unit cost of production 3. full cost of one unit Estimated (planned) fixed overheads and general operating expenses per year Production costs - 100,000 € Selling expenses -30 000 € Administration expenses -15 000 €arrow_forwardAtlanta Sky High Company has two departments, X and Y. The following estimates are for the coming year: X 20,000 Direct manufacturing labor-hours Machine-hours Manufacturing overhead 30,000 $300,000 Y 30,000 20,000 $330,000 The budgeted indirect-cost driver rate for Y based on the number of machine-hours is in excess of X by (Round interim and the final answer to the nearest centarrow_forward
- Calculating and Using a Single Charging Rate The expected costs for the Maintenance Department of Stazler, Inc., for the coming year include: Fixed costs (salaries, tools): $72,930 per year Variable costs (supplies): $1.30 per maintenance hour Estimated usage by: Assembly Department 4,900 Fabricating Department 6,200 Packaging Department 11.000 Total maintenance hours 22,100 Actual usage by: Assembly Department 3,425 Fabricating Department 6,300 Packaging Department 10,200 Total maintenance hours 19,925 Required: 1. Calculate a single charging rate for the Maintenance Department. Round your answer to the nearest cent. per maintenance hour 2. Use this rate to assign the costs of the Maintenance Department to the user departments based on actual usage. Calculate the total amount charged for maintenance for the year. 3. What if the Assembly Department used 4,000 maintenance hours in the year? How much would have been charged out to the three departments? when required, round your answers…arrow_forwardTask 6. The following are consumed for the production of one unit: ➤ 18 kg of material A (price 1 € / kg and 3 m²) material B (price 2 € / m²) Direct labour per unit of product Estimated (planned) variable overheads per year Responsibility centre 14,000, € 1: Direct labour 70,000 h ===== ===== Responsibility centre 21 000, € Responsibility centre 1: 20 hours; rate 0,30€/h Responsibility centre 2: 30 hours; rate 0,50€/h Calculates: 1. variable production costs per unit 2. unit cost of production 3. full cost of one unit 2: Direct labour 180 000 h Estimated (planned)fixed overheads and general operating expenses per year Production costs - 100,000 € Selling expenses -30 000 € Administration expenses -15 000 €arrow_forwardK Base Machinery showed the following operating budget for the next year. Complete parts (a) through (d) below Each scenario is independent Sales $2,400,000 Fixed cost Total variable cost Total cost Net income $1,200,000 760,000 1,960,000 $440,000 (a) Calculate the contribution margin and contribution rate. The contribution margin is $ (Round to the nearest dollar as needed.) maarrow_forward
- Summer Corporation is a shipping container refurbishment company that measures its output by the number of containers refurbished. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results of operations for January. Revenue Employee salaries and wages Refurbishing materials Other expenses Variable Element Fixed Element per per Container Month O $1,400 U O $1,000 F O $1,000 U O $1,400 F S S 50,600 41,200 Refurbished Actual Total for January S 4,100 S S 1,100 S S 700 S S 158,600 92,700 27,000 40,800 When the company prepared its planning budget at the beginning of January, it assumed that 40 containers would have been refurbished. However, 38 containers were actually refurbished during January. The activity variance for "Refurbishing materials" for January would have been closest to:arrow_forwardThe Maria Company estimated its factory overhead of the next period at P160,000. It is estimated that 40,000 units will be produced at a materials cost of P200.000. Production will require 40,000 man-hours at an estimated wage cost of P80,000. The machines will run about 25,000 hours. 1. How much is the material handling cost driver rate? a. 3,000 b. 8.00 c. 200 d. 110.21 e. 93.00 2. How much is the production set ups cost driver rate? a. 3,000 b. 93 c. 200 d. 8.00 e. 110.21 3. How much is the quality inspection cost driver rate? a. 3,000 b. 200 c. 8.00 d. 93.00 e. 20.00 4. How much is the machine depreciation cost driver rate? a. 93 b. 20 c. 8.00 d. 200 e. 3,000 5. What is the factory overhead rate of material cost is the basis? a. Php 2.00 b. Php 1.00 c. 0.80 d. 4.00 e. 6.40 6. What is the factory overhead rate of Machinery hours is the basis? a. Php 6.40 b. Php 0.80 c. 2.00 d. 1.00 e. 4.00 7. What is the factory overhead rate if Direct labour cost is the basis? a. 4.00…arrow_forwardBolger and Co. manufactures large gaskets for the turbine industry. Bolgers per-unit sales price and variable costs for the current year are as follows: Bolgers total fixed costs aggregate to 360,000. Bolgers labor agreement is expiring at the end of the year, and management is concerned about the effects of a new labor agreement on its break-even point in units. The controller performed a sensitivity analysis to ascertain the estimated effect of a 10-per-unit direct labor increase and a 10,000 reduction in fixed costs. Based on these data, the break-even point would: a. decrease by 1,000 units. b. decrease by 125 units. c. increase by 375 units. d. increase by 500 units.arrow_forward
- Krouse Company produces two products, forged putter heads and laminated putter heads, which are sold through specialty golf shops. The company is in the process of developing itsoperating budget for the coming year. Selected data regarding the companys two products areas follows: Manufacturing overhead is applied to units using direct labor hours. Variable manufacturing overhead Ls projected to be 25,000, and fixed manufacturing overhead is expected to be15,000. The estimated cost to produce one unit of the laminated putter head is: a. 42. b. 46. c. 52. d. 62.arrow_forwardHatch Manufacturing produces multiple machine parts. The theoretical cycle time for one of its products is 65 minutes per unit. The budgeted conversion costs for the manufacturing cell dedicated to the product are 12,960,000 per year. The total labor minutes available are 1,440,000. During the year, the cell was able to produce 0.6 units of the product per hour. Suppose also that production incentives exist to minimize unit product costs. Required: 1. Compute the theoretical conversion cost per unit. 2. Compute the applied conversion cost per minute (the amount of conversion cost actually assigned to the product). 3. Discuss how this approach to assigning conversion cost can improve delivery time performance. Explain how conversion cost acts as a performance driver for on-time deliveries.arrow_forwardFoy 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.arrow_forward
- Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage LearningFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
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