MANAGERIAL ACCT W/ACCESS
17th Edition
ISBN: 9781264274017
Author: Garrison
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 9, Problem 16E
To determine
Concept Introduction:
Flexible budget performance report: This is a report that compares actual outcomes for a period to budgeted results produced by a flexible budget. This report differs from a traditional budget. This method yields budgeted expenses that are significantly more relevant to an organization's actual performance.
To prepare: A flexible budget performance report.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Scenario
The Francis Corporation operates two service and two producing departments in its production of go carts. The budgeted overhead
costs directly associated with the departments and other pertinent data for an upcoming month are as follows:
Overhead Costs
Machine Hours
Number of Employees
19.67 (rounded)
16.67 (rounded)
3.00
14.74 (rounded)
Service & Production Departments Data
Service Departments
Maintenance
$144,000
20
O 15.87
Personnel
$80,000
16
Personnel costs are allocated based on the number of employees, and maintenance costs are allocated based on machine hours.
Assume the Assembly department uses direct labor hours to allocate its cost is overhead costs. For the upcoming month, the
estimated direct labor hours is estimated is 19,200 hours.
Question
What will be the predetermined overhead rate for the Assembly department for the upcoming month?
Production Departments
Tooling
$280,000
30,000
60
Assembly
$320,000
20,000
100
Cost Estimation & CVP
It is budget season and Margo, Inc is planning for next year and requires a
breakdown of the factory overhead cost into the fixed and variable
elements. The following data on the OH cost and machine hours are
available for the past six months:
OH Cost Machine Hours
$ 23,910
$ 23,397
$24,153
$23,964
$ 23,732
$ 23,559
$ 142,715
Month
January
February
March
April
May
June
Total
1,800
1,230
2,070
1,860
1,602
1,410
9,972
Required:
1. Assume that Mago uses the high-low method of analysis, determine the
variable OH cost per machine hour and monthly fixed cost
Additional Sales & Cost information for Margo's
Sales Price
Machine Hours Per unit
Direct Labor Hours Per Unit
Direct labor cost per unit
Direct Material cost per unit
2$
75.30
2
2.5
2$
$
40.00
18.50
2. How many units do they need to sell to breakeven in one month
3. How many units do they need to sell to earn a pre-tax profit of $52,410 in one month
4. Create a contribution margin income statement for the pre-tax…
Flexible Budget Performance Report
AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost formulas and actual results for the month of February:
The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $2,900 plus $35 per job, and the actual mobile lab operating expenses for February were $4,530. The company expected to work 50 jobs in February, but actually worked 52 jobs.
Required:
Using Exhibit 9–8 as your guide, prepare a flexible budget performance report showing AirQual Test corporation’s revenue and spending variances and activity variances for February.
Exhibit 9–8 Performance Report Combining Activity Variances with Revenue and Spending Variances
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
Knowledge Booster
Similar questions
- Calculating amount of factory overhead applied to work in process The overhead application rate for a company is 2.50 per unit, made up of 1.00 for fixed overhead and 1.50 for variable overhead. Normal capacity is 10,000 units. In one month, there was an unfavorable flexible budget variance of 200. Actual overhead for the month was 27,000. What was the amount of the budgeted overhead for the actual level of production?arrow_forwardCalculating factory overhead The normal capacity of a factory is 10,000 units per month. Cost and production data follow: Calculate the amount of factory overhead allowed for the actual volume of production each month and the variance between budgeted and actual overhead for each month.arrow_forwardUse the following information for Exercises 9-63 and 9-64: Palladium Inc. produces a variety of household cleaning products. Palladiums controller has developed standard costs for the following four overhead items: Next year, Palladium expects production to require 90,000 direct labor hours. Exercise 9-63 Flexible Budget for Various Levels of Activity Refer to the information for Palladium Inc. above. Required: 1. Prepare an overhead budget for the expected level of direct labor hours for the coming year. 2. Prepare an overhead budget that reflects production that is 15% higher than expected and for production that is 15% lower than expected.arrow_forward
- Calculating factory overhead The standard capacity of a factory is 8,000 units per month. Cost and production data follow: Calculate the amount of factory overhead allowed for the actual volume of production each month and the variance between budgeted and actual overhead for each month.arrow_forwardRefer to Exercise 8.27. At the end of the year, Meliore, Inc., actually produced 310,000 units of the standard model and 115,000 of the deluxe model. The actual overhead costs incurred were: Required: Prepare a performance report for the period. In an attempt to improve budgeting, the controller for Meliore, Inc., has developed a flexible budget for overhead costs. Meliore, Inc., makes two types of products, the standard model and the deluxe model. Meliore expects to produce 300,000 units of the standard model and 120,000 units of the deluxe model during the coming year. The standard model requires 0.05 direct labor hour per unit, and the deluxe model requires 0.08. The controller has developed the following cost formulas for each of the four overhead items: Required: 1. Prepare an overhead budget for the expected activity level for the coming year. 2. Prepare an overhead budget that reflects production that is 10 percent higher than expected (for both products) and a budget for production that is 20 percent lower than expected.arrow_forwardABC Corporation has prepared the following overhead budget for next month. Activity level Variable overhead costs: Supplies Indirect labor Fixed overhead costs: Supervision Utilities Depreciation Total overhead cost 3,700 machine-hours $ 21,090 35,520 18,100 7,100 8,100 $ 89,910 The company's variable overhead costs are driven by machine-hours. What would be the total budgeted overhead cost for next month if the activity level is 3,600 machine-hours rather than 3,700 machine-hours? (Round your intermediate calculations to 2 decimal places.)arrow_forward
- Aero Travel Trailer Manufacturing is working on budgeting utility cost. The controller has decided that utilities are a function of the hours worked during the month. The following information is available and representative of the company’s utility costs: - Hours worked Utility cost incurred Low point 1,300 $ 903 High point 1,680 1,074 If 1,425 hours are worked in a month, total utility cost (rounded to the nearest dollar) using the high-low method should be Group of answer choices $947. $959. $954. $976.arrow_forwardC. Proration D. Proration with direct-cost allocation 11. Gerry's Electronics manufactures mouses for computers. In April, the two production departments had budgeted allocation bases of P5,000 machine hours in Department 1 and 2,500 direct manufacturing labor hours in Department 2. The budgeted manufacturing overheads for the month were P23,000 and P25,000, respectively. For Job 100, the actual costs incurred in the two departments were as follows: Department 1 P44,000 Department 2 Direct materials purchased on account 71,000 Direct materials used 13,000 5,400 Direct manufacturing labor Indirect manufacturing labor 21,000 21,400 4,400 3,600 Indirect materials used 3,000 1,900 6,500 400 Lease on equipment 1,500 Utilities 500 Job 100 incurred 500 machine hours in Department 1 and 150 manufacturing labor hours in Department 2. The company uses a budgeted departmental overhead rate for applying overhead to production. What is the budgeted manufacturing overhead rate for Department 1?…arrow_forwardA company has the following information for the month of October. The company applies overhead (OH) costs using standard machine hours as the allocation base. Actual Results Actual variable OH costs Actual fixed OH costs Actual machine hours Actual output Budget (for 1,000 units) Variable OH Fixed OH Budgeted machine hours 1-1 AP $2,500 $4,700 V $1,280 MHS 1,100 units $2,000 $4,400 1,000 MHS Q. What was the company's FMOH volume variance for October? Answer. (Click to select) (Click to select) $440 Favorable $640 Favorable None of the answers are correct $640 Unfavorable $440 Unfavorablearrow_forward
- Submit A manufacturing company has two service departments, Custodial Services and Maintenance, and three production departments, Cutting, Milling, and Assembly. The company allocates the cost of Custodial Services on the basis of square footage and Maintenance on the basis of labor-hours. No distinction is made between variable and fixed costs. Budgeted operating data for the year just completed follow: Custodial Services Maintenance Cutting Milling Assembly Budgeted costs before allocatlon $20,000 $12,000 $ 120,000 $75,000 $135,000 Square feet 2,000 20,000 10,000 44,000 26,000 Labor hours 4,000 8,000 8,000 a. Calculate the Custodial Services cost that would be allocated to Assembly Department by the direct method. O None of the answers listed O $8,000 O $11,000 O $5,200 O $6,500 b. Calculate the total cost of Assembly Department if the company uses the step-down method rather than the direct method. Assume that the company allocates Custodial Services cost first. O $146,200 O…arrow_forwardAn overhead cost budget for the next month is being prepared by Ebony Supply Company. Past studies indicate that costs have followed behavior patterns as follows: Variable Cost per Direct Labor Hour Indirect materials and supplies P 0.77 Heat, light and power 1.50 Repairs and maintenance 5.00 Lubricants 0.65 In addition, management estimated the total fixed factory overhead at P.248,000, based on a normal capacity of 80,000 direct labor hours. Required: How much is the total factory overhead rate per hour to bel charged (applied) to production? b. If the company plans to manufacture 280,000 units of product next year, how much will be the total variable overhead costs, assuming that four units are produced per direct labor hour? Assuming the same data in b, how much will be the total budgeted fixed overhead costs? d. Assuming the same data as in b, how much factory overhead will be charged to Work-in process? e. Assuming further that the total actual factory overhead in d is P800,000,…arrow_forwardA company uses a standard cost system using direct labor-hours (DLHS) to apply muinufactoring overficad Cost datu reled fo fed manufacturing overhead (FMOH) for a recent period was: Actual FMOH cost incurred $ 840,000 FMOH budget variance 42,000 favorable Activity data for the month was: Denominator activity level in DLHS Standard hours allowed for actual output 21,000 19,600 22,050 DLHS DLHS DLHS Actual number of DLHS incurred The amount of total fixed manufacturing overhead cost applied to production last month was closest to $ 744,800 $ 823,200 $ 784,000 S 837,900 E None of the above is correct. A. B. C. D.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage LearningPrinciples of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage LearningManagerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Principles of Cost Accounting
Accounting
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning