MANAGERIAL ACCOUNTING LL/W ACCESS
17th Edition
ISBN: 9781265537883
Author: Garrison
Publisher: MCG
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Question
Chapter 9, Problem 11E
To determine
Concept Introduction:
Activity variances: These are the differences between the planned and actual budgets caused by the difference in planned and actual activity levels. Inaccurate estimates and
The activity variances of Company L.
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You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president
asked you to review the company's costing system and "do what you can to help us get better control of our manufacturing overhead
costs." You find the company has never used a flexible budget, and you suggest preparing such a budget would be an excellent first
step in overhead planning and control.
After much effort and analysis, you estimated the following cost formulas and gathered the following actual cost data for March:
Utilities
Maintenance
Supplies
Indirect labor
Depreciation
Cost Formula
$16,000+ $0.19 per machine-hour
$38,500+ $1.30 per machine-hour
$0.90 per machine-hour
During March, the company worked 20,000 machine-hours and produced 14,000 units. The company originally planned to work
22,000 machine-hours during March.
Required:
1. Calculate the activity variances for March.
2. Calculate the spending variances for March.
$94,800+ $1.70 per…
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Calculate the activity variances for March. (Indicate the effect of each variance by selecting "F" for favorable, "U" for
unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
FAB Corporation
Activity Variances
For the Month Ended March 31
$ 20,440
Utilities
Maintenance
Supplies
Indirect labor
Depreciation
Total
You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has
asked that you review the company's costing system and "do what you can to help us get better control of our manufacturing
overhead costs." You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be
an excellent first step in overhead planning and control.
After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March:
Utilities
Maintenance
Supplies.
Indirect labor
Depreciation
Cost Formula
$16,800+ $0.17 per machine-hour
$38,600+ $1.90 per machine-hour
$0.40 per machine-hour
$94,700+ $2.10 per machine-hour
$67,700
Actual Cost
in March
$ 22,850
$ 79,900
$9,800
$ 148, 100
$ 69,400
During March, the company worked 23,000 machine-hours and produced 17,000 units. The company had originally planned to work
25,000 machine-hours during March.…
Chapter 9 Solutions
MANAGERIAL ACCOUNTING LL/W ACCESS
Ch. 9 - Prob. 1QCh. 9 - What is a flexible budget and how does it differ...Ch. 9 - Prob. 3QCh. 9 - Why is it difficult to interpret a difference...Ch. 9 - What is an activity variance and what does it...Ch. 9 - Prob. 6QCh. 9 - Prob. 7QCh. 9 - Prob. 8QCh. 9 - Prob. 9QCh. 9 - Prob. 10Q
Ch. 9 - The Excel worksheet form that appears below is to...Ch. 9 - The Excel worksheet form that appears below is to...Ch. 9 - Adger Corporation is a service company that...Ch. 9 - Prob. 2F15Ch. 9 - Prob. 3F15Ch. 9 - Adger Corporation is a service company that...Ch. 9 - Adger Corporation is a service company that...Ch. 9 - Adger Corporation is a service company that...Ch. 9 -
L09-1, LO9-2, LO9-3
Adger Corporation is a...Ch. 9 - Prob. 8F15Ch. 9 - Adger Corporation is a service company that...Ch. 9 - Prob. 10F15Ch. 9 - Prob. 11F15Ch. 9 - Prob. 12F15Ch. 9 - Prob. 13F15Ch. 9 - Prob. 14F15Ch. 9 - Prob. 15F15Ch. 9 - Prob. 1ECh. 9 - Prob. 2ECh. 9 -
EXERCISE 9-3 Revenue and Spending Variances...Ch. 9 - Prob. 4ECh. 9 - Prob. 5ECh. 9 - Prob. 6ECh. 9 - Prob. 7ECh. 9 - Prob. 8ECh. 9 - Prob. 9ECh. 9 - Prob. 10ECh. 9 - Prob. 11ECh. 9 - Prob. 12ECh. 9 - Prob. 13ECh. 9 - Prob. 14ECh. 9 - Prob. 15ECh. 9 - Prob. 16ECh. 9 - Prob. 17PCh. 9 - Prob. 18PCh. 9 - Prob. 19PCh. 9 - Prob. 20PCh. 9 - Prob. 21PCh. 9 - Prob. 22PCh. 9 - Prob. 23PCh. 9 - Prob. 24CCh. 9 - Prob. 25CCh. 9 - Prob. 26C
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Similar questions
- You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company's costing system and "do what you can to help us get better control of our manufacturing overhead costs." You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March: Actual Cost in March Cost Formula $20,600 + $0.10 per machine-hour $40,000 + $1.60 per machine-hour $0.30 per machine-hour $24,200 $ 78,100 $8,400 $ 149,600 $ 71,500 Utilities Maintenance Supplies Indirect labor $130,000 + $0.70 per machine-hour Depreciation $70,000 During March, the company worked 26,000 machine-hours and produced 15,000 units. The company had originally planned to work 30,000 machine-hours during March.…arrow_forwardQuilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,400 pounds of oysters in August. The company's flexible budget for August appears below: Quilcene Oysteria Flexible Budget For the Month Ended August 31 Actual pounds (q) 7,400 Revenue ($4.10q) Expenses: Packing supplies ($0.25q) Oyster bed maintenance ($3,400) Wages and salaries ($2, 100 + $0.45q) Shipping ($0.65q) Utilities ($1, 290) Other ($450 + $0.01g) Total expense $ 30, 340 1, 850 3,400 5,430 4,810 1, 290 524 17,304 $ 13,036 Net operating income The actual results for August appear below: Quilcene Oysteria Income Statement For the Month Ended August 31 Actual pounds 7,400 Revenue $27,500 Expenses: Packing supplies Oyster bed maintenance Wages and salaries Shipping Utilities 2,020 3, 260 5,840 4,540 1, 100 1,144 17,904 Other Total expense Net operating income $9,596arrow_forwardces W Actual pounds (q) Revenue ($4.10g) For the Month Ended August 31 Quilcene Oysteria Flexible Budget Expenses: Packing supplies ($0.30q) Oyster bed maintenance ($3,000) Wages and salaries ($2,400 + $0.30q) Shipping ($0.60q) Utilities ($1,270) Other ($470 + $0.019) Total expense Net operating income The actual results for August appear below: Quilcene Oysteria Income Statement For the Month Ended August 31 Actual pounds Revenue Expenses: Packing supplies Oyster bed maintenance Wages and salaries. Shipping Utilities Other Total expense Net operating income 7,200 $ 27,100 2,330 2,860 4,970 4,050 1,080 1,162 16,452 $ 10,648arrow_forward
- Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,700 pounds of oysters in August. The company's flexible budget for August appears below: For Actual pounds (q) Revenue ($4.05g) Expenses: Packing supplies ($0.30g) Oyster bed maintenance ($3,200) Wages and salaries ($2,100 + $0.40g) Shipping ($0.65g) Utilities ($1,240) Quilcene Oysteria Flexible Budget the Month Ended August 31 Other ($440 + $0.01g). Total expense Net operating income The actual results for August were as follows: Actual pounds Revenue Expenses: Shipping Utilities Other Quilcene Oysteria Income Statement For the Month Ended August 31 Packing supplies Oyster bed maintenance Wages and salaries 7,700 $ 31,185 2,310 3,200 5,180 5,005 1,240 517 17,452 $ 13,733 7,700 $ 26,600 2,480 3,060 5,590 4,735 1,050 1,137arrow_forwardRequired 1 Required 2 Calculate the activity variances for March. Note: Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Utilities Maintenance Supplies Indirect labor Depreciation Total FAB Corporation Activity Variances For the Month Ended March 31 Show Transcribed Text Required 1 Required 2 FAB Corporation Spending Variances For the Month Ended March 31arrow_forwardLavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides estimates concerning the company's costs: Fixed Cost Cost per Car per Month Washed Cleaning supplies Electricity $ 0. 60 $ 0. 08 $ 0. 25 $ 0. 20 $ 1,300 Maintenance Wages and salaries Depreciation $ 4,400 $ 8,100 $ 1,900 $ 1,600 Rent Administrative expenses $ 0.03 For example, electricity costs should be $1,300 per month plus $0.08 per car washed. The company expects to wash 8,100 cars in August and to collect an average of $6.50 per car washed. The actual operating results for August are as follows: Lavage Rapide Income Statement For the Month Ended August 31 Actual cars washed 8,200 Revenue $ 54,750 Expenses: Cleaning supplies Electricity 5,360 1,918 2,265 6,380 8,100 2,100 Maintenance Wages and salaries Depreciation Rent Administrative expenses Total expense 1,743 27,866 $ 26,884 Net operating income Required: Prepare a flexible budget…arrow_forward
- Activity Variances The company actually washed 8,800 cars in August. Required: Calculate the company’s activity variances for august. (Hint: Refer to Exhibit 9–6.) Exhibit 9–6 Flexible Budget Based on Actual Activityarrow_forwardYou have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company's costing system and "do what you can to help us get better control of our manufacturing overhead costs." You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March: Utilities Maintenance Supplies Indirect labor Depreciation Cost Formula $20,600 + $0.10 per machine-hour $40,000+ $1.60 per machine-hour $0.30 per machine-hour $130,000 $0.70 per machine-hour $70,000 During March, the company worked 26,000 machine-hours and produced 15,000 units. The company had originally planned to work 30,000 machine-hours during March. Required: 1. Calculate the activity variances for March. 2.…arrow_forward9 HW i k ■ K http:// mces Instructor wages Classroom supplies Utilities /ext/map/indexhtml?_con conexternal browser 08launchUrl=https%253A%252F%252Fims.mheducation.com%252Fmghmiddleware%252Fme The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost drivers it uses in its budgeting and performance reports-the number of courses and the total number of students. For example, the school might run. two courses in a month and have a total of 62 students enrolled in those two courses. Data concerning the company's cost formulas appear below: Compus rent Insurance Administrative expenses Revenue Instructor wages Classroom supplies Utilities Fixed Cost per Month $ 1,210 $5,200 $ 2,300 $ 3,800 Compus rent Insurance Administrative expenses Cost per Course $ 2,930 $ 70 $ 44 For example, administrative expenses should be $3,800 per month plus $44 per course plus $5 per student. The company's sales should average $870 per student. Actual $…arrow_forward
- Direct labor time variance Maywood City Police uses variance analysis to monitor police staffing. The following table identifies three common police activities, the standard time to perform each activity, and their actual frequency to establish the expected cost to serve these activities. Police Activity Standard Hours per Activity Actual Activities for Year Total Employee Hours Theft 0.60 7,000 4,200 Arrest 1.50 18,000 27,000 Patrol activities 0.30 9,000 2,700 33,900 The police are paid 25 per hour. The actual amount of hours per activity for the year were as follows: Police Activity Actual Hours per Activity Theft 0.75 Arrest 2.00 Patrol activities 0.40 A. Determine the total budgeted cost to perform the three police activities. B. Determine the total actual cost to perform the three police activities. C. Determine the direct labor time variance. D. What does the time variance suggest?arrow_forwardCritique a Variance Report The Terminator Inc. provides on-site residential pest extermination services. The company bas several mobile teams who are dispatched from a central location in company-owned trucks. The company uses the number of jobs to measure activity. At the beginning of April, the company budgeted for 100 jobs, but the actual number of jobs turned out to be 105. A report comparing the budgeted revenues and costs to the actual revenues and costs appears below: Required: Is the above variance report useful for evaluating how well revenues and costs were controlled during April? Why or Why not?arrow_forwardCritique a Variance Report The Terminator Inc. A management intern has suggested that the budgeted revenues and costs should be adjusted for the actual level of activity in April before they are compared to the actual revenues and costs. Because the actual level of activity was 5% higher than budgeted, the intern suggested that all budgeted revenues and costs should be adjusted upward by 5%. A report comparing the budgeted revenues and costs, with this adjustment, to the actual revenues and costs appears below: Required: Is the above variance report useful for evaluating how well revenues and costs were controlled during April? Why or Why not?arrow_forward
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