MANAGERIAL ACCT W/ACCESS
17th Edition
ISBN: 9781264274017
Author: Garrison
Publisher: MCG
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Question
Chapter 9, Problem 12E
To determine
Concept Introduction:
Revenue and spending variance: The difference between the actual and budgeted revenue and expenses is stated as revenue and spending variance. It helps the organization to compare the actual results with the budget and analyze those differences. The company can achieve its desired profit with favorable price variance. It has a positive impact on profitability. An unfavorable variance suggests negative profits because, with the increased costs, the profits are reduced.
The revenue and spending variances of the company for the month of August.
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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:
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Revenue
Expenses:
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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
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3,060
5,590
4,735
1,050
1,137
Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table
provides data concerning the company's costs.
Cleaning supplies
Electricity
Maintenance
Wages and salaries
Depreciation
Administrative expenses
Rent
Actual cars washed
Revenue
Expenses:
Cleaning supplies
Electricity
Haintenance
Hages and salaries
Depreciation
For example, electricity costs are $1,300 per month plus $0.09 per car washed. The company expects to wash 8,300 cars in August
and to collect an average of $6,70 per car washed.
The actual operating results for August are as follows:
Lavage Rapide
Income Statement
For the Honth Ended August 31
Rent
Fixed Cost
per Month
Administrative expenses
Total expense
Net operating income
$1,300
$4,700
$8,100
$1,900
$1,700
Cost per
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0,400
$57,710
5,480
2,017
1,070
7,550
8,100
2,100
1,932
20,249
$ 29,4611
$0.60
$0.09
$0.10
$0.30
$0.04
Required:
Calculate the company's revenue and spending variances for…
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…
Chapter 9 Solutions
MANAGERIAL ACCT 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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