Horngren's Accounting, Student Value Edition (12th Edition)
12th Edition
ISBN: 9780134487151
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Textbook Question
Chapter 23, Problem P23.31BPGB
Preparing a flexible budget and computing
Learning Objectives 1, 2, 3, 4
2. VOH Eff.Var.$1,377 U
McKnight Recliners manufactures leather recliners and uses flexible budgeting and a standard cost system. McKnight allocates
| Sales | (1,025 recliners x 5500 each)(1,005 recliners x $495 each) | $512,500 | $497,475 |
| Variable |
|||
| Direct Materials | (6,150 yds.@$8.50yard) | $2,275 | |
| (6,300 yds.@$8.30yard) | $2,290 | ||
| Direct Labor | (10,250 DLH@$9.20/DLHr) | 94,300 | |
| (9,850 DLHr@$9.40/DLHr) | 92,590 | ||
| Variable Overhead | (6,150 yds.@55.10/yard) | 31,345 |
(6,300 yds. @$6.50/yard) 40,950
Fixed Manufacturing Costs:
| Fixed Overhead | 62,730 | 64,730 |
| Total Cost of Goods Sold | 240,670 | 250,560 |
| Gross Profit | $271,830 | $246,915 |
Requirements
1. Prepare a flexible budget based on the actual number of recliners sold.
2. Compute the cost variance and the efficiency variance for direct materials and for direct labor. For manufacturing overhead, compute the variable overhead cost, variable overhead efficiency, fixed overhead cost, and fixed overhead volume variances. Round to the nearest dollar.
3. Have McKnight’s managers done a good job or a poor job controlling materials, labor, and overhead costs? Why’
4. Describe how McKnight’s managers can benefit from the standard cost system,
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Accounting Capstone - Budget Performance Variane Report
Mastery Problem: Evaluating Variances from Standard Costs
Question Content Area
Sole Purpose Shoe Company
Sole Purpose Shoe Company is owned and operated by Sarah Charles. The company manufactures casual shoes, with manufacturing facilities in your state. Sarah began the business this year, and while she has a great deal of experience in manufacturing popular and comfortable shoes, she needs some help in evaluating her results for the year, and asks for your help.
Starting Questions
Sarah’s first questions for you have to do with the general ideas and terminology used to evaluate variances.
Provide answers to the following questions (1)-(3).
1. Why might Sarah want to use standard costs to compare with her actual costs?
a. Standard costs give management a cost structure for products that is applicable for the entire life of the business.
b. Standard costs allow management to motivate employees by comparing their…
Practice : (see attachemnt)
please address parts B, C, D
please show any calculations for reference
a) What is meant by the term flexible budget? What role do flexible budgets play in evaluating performance?
The cost accountant for Bradley, Inc., prepared the following monthly performance report relating to the Finishing Department:
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Chapter 23 Solutions
Horngren's Accounting, Student Value Edition (12th Edition)
Ch. 23 - Prob. 1QCCh. 23 - MajorNet Systems is a start-up company that makes...Ch. 23 - MajorNet Systems is a start-up company that makes...Ch. 23 - MajorNet Systems is a start-up company that makes...Ch. 23 - MajorNet Systems has budgeted three hours of...Ch. 23 - MajorNet Systems has budgeted three hours of...Ch. 23 - FrontGrade Systems allocates manufacturing...Ch. 23 - FrontGrade Systems allocates manufacturing...Ch. 23 - FrontGrade Systems allocates manufacturing...Ch. 23 - The person probably most responsible for the...
Ch. 23 - HajorNet System’s static budget predicted...Ch. 23 - What is a variance?Ch. 23 - Explain the difference between a favorable and an...Ch. 23 - What is a static budget performance report?Ch. 23 - How do flexible budgets differ from static...Ch. 23 - How is a flexible budget used?Ch. 23 - What are the two components of the static budget...Ch. 23 - What is a flexible budget performance report?Ch. 23 - What is a standard cost system?Ch. 23 - Explain the difference between a cost standard and...Ch. 23 - Give the general formulas for determining cost and...Ch. 23 - How does the static budget affect cost and...Ch. 23 - List the direct materials variances, and briefly...Ch. 23 - List the direct labor variances, and briefly...Ch. 23 - List the variable overhead variances, and briefly...Ch. 23 - List the fixed overhead variances, and briefly...Ch. 23 - How is the fixed overhead volume variance...Ch. 23 - What is management by exception?Ch. 23 - List the eight product variances and the manager...Ch. 23 - Briefly describe how journal entries differ in a...Ch. 23 - What is a standard cost income statement?Ch. 23 - Matching terms Learning Objective 1 Match each...Ch. 23 - Preparing flexible budgets Learning Objective 1...Ch. 23 - Calculating flexible budget variances Learning...Ch. 23 - Matching terms Learning Objective 2 Match each...Ch. 23 - Identifying the benefits of standard costs...Ch. 23 - Calculating materials variances Learning Objective...Ch. 23 - Calculating labor variances Learning Objective 3...Ch. 23 - Interpreting material and labor variances Learning...Ch. 23 - Computing standard overhead allocation rates...Ch. 23 - Computing overhead variances Learning Objective 4...Ch. 23 - Understanding variance relationships Learning...Ch. 23 - Journalizing materials entries Learning Objectives...Ch. 23 - Journalizing labor entries Learning Objectives 6...Ch. 23 - Preparing a standard cost income statement...Ch. 23 - Preparing a flexible budget Learning Objective 1...Ch. 23 - Preparing a flexible budget performance report...Ch. 23 - Preparing a flexible budget performance report...Ch. 23 - Defining the benefits of setting cost standards...Ch. 23 - Calculating materials and labor variances Learning...Ch. 23 - Computing overhead variances Learning Objective 4...Ch. 23 - Calculating overhead variances Learning Objective...Ch. 23 - Preparing a standard cost income statement...Ch. 23 - Preparing journal entries Learning Objective 6 MOH...Ch. 23 - Preparing a standard cost income statement...Ch. 23 - Preparing a flexible budget performance report...Ch. 23 - Preparing a flexible budget computing standard...Ch. 23 - Computing standard cost variances and reporting to...Ch. 23 - Computing and journalizing standard cost variances...Ch. 23 - Prob. P23.29APGACh. 23 - Preparing a flexible budget performance report...Ch. 23 - Preparing a flexible budget and computing standard...Ch. 23 - Prob. P23.32BPGBCh. 23 - Prob. P23.33BPGBCh. 23 - Preparing a standard cost income statement...Ch. 23 - Prob. P23.35CTCh. 23 - Preparing a flexible budget and performance report...Ch. 23 - Prob. 23.1TIATCCh. 23 - Decision Case 23-1 Suppose you manage the local...Ch. 23 - Fraud Case 23-1 Drew Castello, general manager of...
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