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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MANAGERIAL ACCT W/ACCESS
- Question 1 Part II Advent Corporation started to produce automated garbage bins. The company uses a standard cost system and determines that it should take two hours of direct labour to produce one garbage bin.The normal production capacity for the company’s bins is 62,500 units per year. The total budgetedoverhead at normal capacity is $450,000 comprised of $200,000 of variable costs and $250,000 of fixedcosts. Advent Corporation applies overhead on the basis of direct labour hours.During the current year, Advent Corporation produced 95,000 bins, worked 99,000 direct labour hours,and incurred variable overhead costs of $265,000 and fixed overhead costs of $326,200. Required:a. Compute the predetermined variable overhead rate and the predetermined fixed overhead rate.b. Compute the applied overhead for Advent for the year. c. Compute the total overhead variance.arrow_forwardQuestion 1 Shiashi Ltd is preparing its manufacturing overhead budget for 2024. Relevant data consist of the following: - Units to be produced (by quarters): 20,000, 24,000, 34,000 and 36,000. Direct labour: Time is 1.5 hours per unit. Variable overhead costs per direct labour hour: Indirect materials GH¢1.40; indirect labour GH 2.40 and maintenance $1.50. Fixed overhead costs per quarter: Supervisory salaries GH 55,000; depreciation GH 27,000 and maintenance GH¢25,000. a) You are required to prepare the manufacturing overhead budget for the year, showing quarterly data. b) What does an organisation stand to gain by preparing annual budgets for its operations? c) Describe the budgeting process of any business entity that you are familiar with.arrow_forwardPart 1 Waterways uses time and material pricing when it bids on drainage projects. Budgeted data for 2022 for installation division 1 are as follows. Waterways Corporation Installation Division 1 Budgeted Costs for Drainage Projects for 2022 Labour wages (5.760 hours) Supervisor's salary Clerical and accountant wages Drainage supplies manager Overhead Total Time Charges Material Loading Charges $241,920 63,360 51,840 $357,120 $ 60,000 4,000 40,000 21,000 $125,000 Waterways desires a $23 profit margin per hour of labour and 25% profit on materials. Materials are transferred in from the manufacturing division. The total estimated invoice cost of materials in 2022 will be $500,000. Instructions a. Suppose Ryan accepts the order. Determine what the impact would be on: 1. the plant, 2. the installation division, and 3. the company as a whole. b. What do you think would be the best course of action in this situation? Explain. a. Calculate the rate per hour of labour. b. Calculate the…arrow_forward
- 15 MetalSheet Corporation is organized into two operating divisions (Fabrication and Finishing). The Maintenance Department provides services to both the Fabrication Division and the Finishing Division. The Maintenance Department's variable costs are budgeted at $31 per machine hour, with fixed costs budgeted at $287,000 for the year. Fabrication Division Finishing Division Multiple Choice At the end of the year, the actual variable costs of the Maintenance Department were $215,963 and fixed costs were $272,980. The Fabrication Division recorded a total of 1,830 machine hours for the year and the Finishing Division recorded a total of 4,940 machine hours. As MetalSheet Corporation is evaluating performance at the end of the year, how much of the Maintenance Department cost should be charged to the Finishing Division? $382,172 $354,040 $373,121 Percentage of Peak Period Capacity Required 30% 70% $362,698 Hours Planned 1,800 4,980arrow_forwardQuestion 9.2 Vision Limited manufactures a product that has the following costs: Per unit Per year Direct materials $6.00 Direct labour 5.00 Variable manufacturing overhead 4.00 Fixed manufacturing overhead $360,000 Variable SG&A expenses 5.00 Fixed SG&A expenses 120,000 The company applies the absorption costing approach to cost-plus pricing. The calculations are based on budgeted production and sales of 30,000 units per year.The company has spent $600,000 on this product and expects a return on investment of 15%.Required:a) Calculate the markup on absorption cost.b) Compute the target selling price of the product using the absorption costing approach.arrow_forwardQuestion 6.2 The Lawn Patrol Corporation has two divisions, the Lawnmower Division and the Landscaping Division, which both operate under one plant. The following data apply to the coming budget year: Budgeted costs of the operating the plant for 4,000 to 8,000 hours: Fixed operating costs per year $280,000 Variable operating costs $15 per hour Practical capacity 7,000 hours per year Budgeted long-run usage per year: Lawnmower Division 325 hours × 12 months = 3,900 hours per year Landscaping Division…arrow_forward
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