Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
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Textbook Question
Chapter 7, Problem 6P
Preparing 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.
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Principles of Cost Accounting
Ch. 7 - Prob. 1QCh. 7 - Prob. 2QCh. 7 - Prob. 3QCh. 7 - Prob. 4QCh. 7 - Explain zero-based budgeting and how it differs...Ch. 7 - Prob. 6QCh. 7 - Which operating budget must be prepared before the...Ch. 7 - Prob. 8QCh. 7 - Why is it important to have front-line managers...Ch. 7 - If the sales forecast estimates that 50,000 units...
Ch. 7 - What are the advantages and disadvantages of each...Ch. 7 - What three operating budgets can be prepared...Ch. 7 - Prob. 13QCh. 7 - What are the three budgets that are needed in...Ch. 7 - Why might Web-based budgeting be more useful than...Ch. 7 - What is a flexible budget?Ch. 7 - Why is a flexible budget better than a master...Ch. 7 - Why is it important to distinguish between...Ch. 7 - Why is the concept of relevant range important...Ch. 7 - In comparing actual sales revenue to flexible...Ch. 7 - How would you define the following? a. Theoretical...Ch. 7 - Is it possible for a factory to operate at more...Ch. 7 - If a factory operates at 100% of capacity one...Ch. 7 - How is the standard cost per unit for factory...Ch. 7 - When allocating service department costs to...Ch. 7 - The sales department of Macro Manufacturing Co....Ch. 7 - The sales department of F. Pollard Manufacturing...Ch. 7 - Barnes Manufacturing Co. forecast October sales to...Ch. 7 - Prepare a cost of goods sold budget for the Crest...Ch. 7 - Prepare a cost of goods sold budget for MacLaren...Ch. 7 - Roman Inc. has the following totals from its...Ch. 7 - Starburst Inc. has the following items and amounts...Ch. 7 - Using the following per-unit and total amounts,...Ch. 7 - Cortez Manufacturing, Inc. has the following...Ch. 7 - Prob. 10ECh. 7 - Prob. 11ECh. 7 - Prob. 12ECh. 7 - Prob. 13ECh. 7 - Calculating factory overhead The normal capacity...Ch. 7 - The Sales Department of Minimus Inc. has forecast...Ch. 7 - Sales, production, direct materials, direct labor,...Ch. 7 - Budgeted selling and administrative expenses for...Ch. 7 - Prob. 4PCh. 7 - Selling and administrative expense budget and...Ch. 7 - Preparing a flexible budget Use the information in...Ch. 7 - Preparing a performance report Use the flexible...Ch. 7 - Preparing a performance report Use the flexible...Ch. 7 - Flexible budget for factory overhead Presented...Ch. 7 - Prob. 10PCh. 7 - Overhead application rate Creole Manufacturing...Ch. 7 - Overhead application rate Roll Tide Manufacturing...Ch. 7 - Flexible budgeting, performance measurement, and...
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- Prepare a flexible budgeted income for 120,000 units using the following information from a static budget for 100,000 units:arrow_forwardPrepare a flexible budgeted income statement for 47,000 units using the following information from a static budget for 45,000 units:arrow_forwardUsing the provided budgeted information for production of 10,000 and 15,000 units, prepare a flexible budget for 17,000 units.arrow_forward
- Preparing a performance report Use the flexible budget prepared in P7-6 for the 29,000-unit level of activity and the actual operating results listed below for the 29,000- unit level. Required: 1. Prepare a performance report. 2. List the major reasons why the actual operating income at 29,000 units differs from the master budget operating income at 30,000 units in Figure 7-12. 3. Given the level at which the company operated, how was its cost control? Item Direct materials: Direct labor:arrow_forwardDigital Solutions Inc. uses flexible budgets that are based on the following data: Prepare a flexible selling and administrative expenses budget for October for sales volumes of 500,000, 750,000, and 1,000,000.arrow_forwardBefore the year began, the following static budget was developed for the estimated sales of 100,000. Sales are sluggish and management needs to revise its budget. Use this information to prepare a flexible budget for 80,000 and 90,000 units of sales.arrow_forward
- Preparing a performance report Use the flexible budget prepared in P7-6 for the 31,000-unit level and the actual operating results listed below for the 31,000-unit level. Required: 1. Prepare a performance report. 2. List the major reasons why the actual operating income at 31,000 units differs from the master budget operating income at 30,000 units in Figure 7-12. 3. Given the level at which the company operated, how was its cost control? Item Direct materials: Direct labor:arrow_forwardBefore the year began, the following static budget was developed for the estimated sales of 50,000. Sales are higher than expected and management needs to revise its budget. Prepare a flexible budget for 100,000 and 110,000 units of sales.arrow_forwardFlexible Budget with Different Levels of Production Balboa Company budgeted the following amounts: Required: Prepare a flexible budget for 4,000 units, 4,500 units, and 5,000 units.arrow_forward
- Using the following per-unit and total amounts, prepare a flexible budget at the 14,000-, 15,000-, and 16,000-unit levels of production and sales for Natural Products Inc.:arrow_forwardStarburst Inc. has the following items and amounts as part of its master budget at the 10,000-unit level of sales and production: Determine the total dollar amounts for the above items that would appear in a flexible budget at the following volume levels, assuming that both levels are within the relevant range: a. 8,000-unit level of sales and production b. 12,000-unit level of sales and production (Hint: You must first determine the unit selling price and certain unit costs.)arrow_forwardFlexible budget for factory overhead Presented below are the monthly factory overhead cost budget (at normal capacity of 5,000 units or 20,000 direct labor hours) and the production and cost data for a month. The predetermined overhead rate is based on normal capacity. Required: 1. Assuming that variable costs will vary in direct proportion to the change in volume, prepare a flexible budget for production levels of 80%, 90%, and 110% of normal capacity. Also determine the predetermined factory overhead rate at each level of volume in both units and direct labor hours. 2. Prepare a flexible budget for production levels of 80%, 90%, and 110%, assuming that variable costs will vary in direct proportion to the change in volume, but with the following exceptions. (Hint: Set up a third category for semi-variable expenses.) a. At 110% of capacity, another supervisor will be needed at a salary of 24,000 annually. b. At 80% of capacity, the repairs expense will drop to one-half of the amount at 100% capacity. c. At 80% of capacity, one part-time maintenance worker, earning 10,000 a year, will be laid off. d. At 110% of capacity, a machine not normally in use and on which no depreciation is normally recorded will be used in production. Its cost was 12,000, it has a 10-year life, and straight-line depreciation will be taken.arrow_forward
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