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Flexible budget. Bryant Company’s budgeted prices for direct materials, direct manufacturing labor and direct marketing (distribution) labor per attaché case are $43, $6, and $13, respectively. The president is pleased with the following performance report:
Actual output was 10,000 attaché cases. Assume all three direct-cost items shown are variable costs.
Required
Is the president’s pleasure justified? Prepare a revised performance report that uses a flexible budget and a static budget.
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EBK HORNGREN'S COST ACCOUNTING
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- FLEXIBLE BUDGETS AND PERFORMANCE ANALYSIS, AND STANDARD COSTING Excellent Institute offers executive training programmes. It bases its budgets on two measures of activity (i.e., cost drivers): number of executives and number of programmes. The institute uses the following data in its budgeting: Fixed element per month ($) Variable element per executive ($) Variable element per programme ($) Revenue 0 336 0 Instructor wages 0 0 2000 Office supplies 0 52 30 Admin expenses 47,700 13 29 In January, the institute budgeted for 1,870 executives and 174 programmes. The institute’s income statement showing the actual results for the month appears below: Excellent Institute Income…arrow_forwardYou are working as Executive Assistant to the Chairman in Bharat Gears, an automotive company in Chennai. The following data has been presented to you for interpretation to be given to the Chairman explaining to him the department's responsibility for deviation of performance. Prepare a Flexible budget and show who is responsible for deviation of performance. This is one month's data. Static Budget in Output Units Actual Output Units produced and sold. Budgeted Selling Price per unit of Output Budgeted Variable Costs per unit of Output Budgeted Fixed Costs Per Month Actual Revenue Actual Variable Costs Favorable Variance in Fixed Costs 25,000 23,000 Rs 40.00 Rs 25.00 Rs 2,00,000.00 Rs 8,74,000.00 Rs 6,30,000.00 Rs 5,000.00 Although output units sold exceeded expectations, operating income did not. Assume that there was no beginning or ending inventory. You thought to analyze the situation. Use F for Favourable and U for Unfavourable.arrow_forwardBeta Company's budgeted prices for direct materials, direct manufacturing labor, and direct marketing (distribution) labor per luxury wallet are $41, $5, and $11, respectively. Assume all three direct-cost items shown are variable costs. The president is pleased with the following performance report: Direct materials Direct manufacturing labor Direct marketing (distribution) labor O A. $41,000 F O B. How much was the flexible budget variance for direct materials? $4,500 F O C. $4,500 U Actual Costs $373,500 48,600 103,500 O D. $36,500 U Static Budget $410,000 50,000 110,000 Variance $36,500 F 1,400 F 6,500 Farrow_forward
- The budgeted prices for materials and direct labor per unit of finished product are $8 and $7, respectively. The production manager is delighted about the following data: Static Budget Direct materials $59,200 Direct labor 51,800 Actual Costs $49,900 39,200 Variance $9,300 F 12,600 F ? ? 33,000 Is the manager’s happiness justified? Prepare a report that might provide a more detailed explanation of why the static budget was not achieved. Good output was 5,300 units.arrow_forwardMatthew works in the accounting department of a local footwear manufacturer that specializes in clogs and boots. Clogs and boots typically sell for $97 and $192 per pair, respectively. Based on past experience, fashion trends, and seasonal shifts, the company expected to sell 760 pairs of clogs and 240 pairs of boots. The variable cost per pair was $52 for clogs and $78 for boots. At the end of the year, Matthew evaluated the company's sales and contribution margin amounts against the budget. Actual results for the year were as follows. . . . (a) Actual sales volume: clogs, 869; boots, 231. Actual selling price: clogs, $108 per pair; boots, $181 per pair. Actual per-unit variable costs for each product were the same as budgeted. Your answer is correct.arrow_forwardBeta Company's budgeted prices for direct materials, direct manufacturing labor, and direct marketing (distribution) labor per luxury wallet are $41, $5, and $11, respectively. Assume all three direct-cost items shown are variable costs. The president is pleased with the following performance report: Direct materials Direct manufacturing labor Direct marketing (distribution) labor OA. 10,000 Actual Costs $373,500 48,600 103,500 What was the quantity of luxury wallets planned in the sales budget? B. 9,110 O C. 9,720 D. 9,410 Static Budget $410,000 50,000 110,000 Variance $36,500 F 1,400 F 6,500 Farrow_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_forwardThese are True/False questions. ____ 6. If the total unit cost of manufacturing Product Y is currently $36 and the total unit cost after modifying the style is estimated to be $48, the differential cost for this situation is $12. ____ 7. A process whereby the effect of fluctuations in level of activity is built into the budgeting system is referred to as flexible budgeting. ____ 8. In an investment center, the manager has the responsibility and the authority to make decisions that affect not only costs and revenues, but also the plant assets invested in the center. ____ 9. The capital expenditures budget summarizes future plans for acquisition of fixed assets. ____ 10. The process by which management plans, evaluates, and controls long-term investment decisions involving fixed assets is called capital investment analysis.arrow_forwardA flexible budget graph for the Assembly Department shows the following: 1. At zero direct labor hours, the total budgeted cost line intersects the vertical axis at $128,000. 2. At normal capacity of 50,000 direct labor hours, the line drawn from the total budgeted cost line intersects the vertical axis at $376,000. Develop the budgeted cost calculation for the Assembly Department and identify the fixed and variable costs.arrow_forward
- Your answer is partially correct. Indigo Company uses a flexible budget for manufacturing overhead based on direct labor hours. Budgeted variable manufacturing overhead costs per direct labor hour are as follows. Indirect labor Indirect materials Utilities $1.10 0.80 0.50 Budgeted fixed overhead costs per month are Supervision $4,800, Depreciation $1,440, and Property Taxes $960. The company believes it will normally operate in a range of 8,400-12,000 direct labor hours per month. Prepare a monthly manufacturing overhead flexible budget for 2022 for the expected range of activity, using increments of 1,200 direct labor hours. (List variable costs before fixed costs.)arrow_forwardRammazzotti, Inc., is looking for feedback on company performance. The company compares the budget for the year with the actual costs.Rammazzotti, Inc., had the following budgeted data: Unit sales for the year 26,000 Unit production for the year 26,000 Budgeted fixed overhead for the year: Supervision $ 800 Depreciation 2,000 Rent 100 Budgeted variable costs per unit: Direct materials $0.15 Direct labor 0.20 Supplies 0.02 Indirect labor 0.05 Power 0.02 The following actually occurred: Actual unit sales for the year 24,000 Actual unit production for the year 28,000 Actual fixed overhead for the year: Supervision $ 850 Depreciation 2,000 Rent 100 Actual variable costs: Direct materials $3,500 Direct labor 4,900 Supplies 530 Indirect labor 1,250 Power 470 The total budgeted costs for the year were a.$14,340. b.$11,440. c.$13,510. d.$13,460.arrow_forwardPhoenix Company’s 2019 master budget included the following fixed budget report. It is based on an expected production and sales volume of 15,000 units. Classify all items listed in the fixed budget as variable or fixed. Also determine their amounts per unit or their amounts for the year, as appropriate. Identify the unit variable costs in the format of variable costing, according to your findings in part a Organize a template for variable costing income statements in which the sales volume is a variable. Test your template for 15,000 units sales volume to see if you get the same income as stated above Find the breakeven point and provide the income statement at break even Provide income statement at sales volume 12,000, 14,000, 16,000, and 18,000arrow_forward
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
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