MANAGERIAL ACCOUNTING (CUSTOM LL)
17th Edition
ISBN: 9781264294633
Author: Garrison
Publisher: MCG
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Chapter 9, Problem 22P
1.
To determine
Introduction: The difference between the planning budget and the flexible budget is known as activity variance. It arises due to the difference between the planned activity level and the actual activity level.
The usefulness of cost reports for the company.
2.
To determine
Introduction: The difference between the planning budget and the flexible budget is known as activity variance. It arises due to the difference between the planned activity level and the actual activity level.
To explain: The recommended changes in the reports for better controlling costs.
3.
To determine
Introduction: The difference between the planning budget and the flexible budget is known as activity variance. It arises due to the difference between the planned activity level and the actual activity level.
To prepare: The new performance report.
4.
To determine
Introduction: The difference between the planning budget and the flexible budget is known as activity variance. It arises due to the difference between the planned activity level and the actual activity level.
To evaluate: The performance of the assembly department.
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Question #2
Sunshine Goods Ltd is a revenue maximizing firm that engages in the analysis of variances to provide useful information to management. The company manufactures and sells three (3) products, RG, KC and MG. During July 2019 the following budgeted and actual results were presented to you the management accountant for analysis:
Budgeted Results
Product
Total Sales $
Volume/units
Price $
Contribution margin per unit $
Total contribution margin $
RG
585,000
900
650
820
738,000
KC
500,000
500
1,000
850
425,000
MG
300,000
600
500
720
432,000
Total
2,000
1,595,000
Actual Results
Product
Total Sales $
Volume/units
Price $
Contribution margin per unit $
Total contribution margin $
RG
500,000
500
1,000
800
400,000
KC
270,000
300
900
`900
270,000
MG
105,000
350
300
700
245,000
Total
1,150
915,000
Required
Total sales…
ces
Several years ago, Westmont Corporation developed a comprehensive budgeting system for planning and control purposes.
While departmental supervisors have been happy with the system, the factory manager has expressed considerable
dissatisfaction with the information being generated by the system.
A report for the company's Assembly Department for the month of March follows:
Machine-hours
Variable costs:
Supplies
Scrap
Indirect materials
Fixed costs:
Wages and salaries
Equipment depreciation
Total cost
Assembly Department
Cost Report
For the Month Ended March 31
Actual
Results
15,000
$ 11,400
42,000
119,000
85,900
110,000
Planning
Budget
20,000
$ 12,000
45,000
142,500
Variances
$ 600 F
3,000 F
23,500 F
80,000
110,000
$368,300 $ 389,500 $ 21,200 F
5,900 U
0
After receiving a copy of this cost report, the supervisor of the Assembly Department stated, "These reports are super. It
makes me feel really good to see how well things are going in my department. I can't understand why those…
Business Decision Case Porter Corporation has just hired Bill Harlow as its new controller. Al- though Harlow has had little formal accounting training, he professes to be highly experienced, having learned accounting “the hard way” in the field. At the end of his first month’s work, Harlow prepared the following performance report:
PORTER CORPORATION
Performance Report
for the Month of June, 2018
Total Actual Costs Total Budgeted Costs Variances
Direct materials............................ $216,630 $237,600 $20,970 F
Direct labor ............................... 119,340 132,000 12,660 F
Variable overhead ......................... 63,000 66,000 3,000 F
Fixed overhead............................ 184,000 184,000
$582,970 $619,600 $36,630 F
In his presentation at Porter’s month-end management meeting, Harlow indicated that things were going “fantastically.” “The figures indicate,” he said, “that the firm is beating its budget in all cost categories.” This good news made everyone at the…
Chapter 9 Solutions
MANAGERIAL ACCOUNTING (CUSTOM LL)
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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- Several years ago, Westmont Corporation developed a comprehensive budgeting system for planning and control purposes. While departmental supervisors have been happy with the system, the factory manager has expressed considerable dissatisfaction with the information being generated by the system. A report for the company's Assembly Department for the month of March follows: Assembly DepartmentCost ReportFor the Month Ended March 31 Actual Results Planning Budget Variances Machine-hours 15,000 20,000 Variable costs: Supplies $ 8,700 $ 9,300 $ 600 F Scrap 29,400 31,500 2,100 F Indirect materials 86,600 102,000 15,400 F Fixed costs: Wages and salaries 75,100 71,000 4,100 U Equipment depreciation 101,000 101,000 0 Total cost $ 300,800 $ 314,800 $ 14,000 F After receiving a copy of this cost report, the supervisor of the Assembly Department stated, “These reports are super. It makes me feel really good to see how well things are going in my…arrow_forwardSeveral years ago, Westmont Corporation developed a comprehensive budgeting system for planning and control purposes. While departmental supervisors have been happy with the system, the factory manager has expressed considerable dissatisfaction with the information being generated by the system. A report for the company's Assembly Department for the month of March follows: Assembly DepartmentCost ReportFor the Month Ended March 31 Actual Results Planning Budget Variances Machine-hours 15,000 20,000 Variable costs: Supplies $ 11,400 $ 12,000 $ 600 F Scrap 42,000 45,000 3,000 F Indirect materials 119,000 142,500 23,500 F Fixed costs: Wages and salaries 85,900 80,000 5,900 U Equipment depreciation 110,000 110,000 0 Total cost $ 368,300 $ 389,500 $ 21,200 F After receiving a copy of this cost report, the supervisor of the Assembly Department stated, “These reports are super. It makes me feel really good to see how well things are…arrow_forwardSeveral years ago, Westmont Corporation developed a comprehensive budgeting system for planning and control purposes. While departmental supervisors have been happy with the system, the factory manager has expressed considerable dissatisfaction with the information being generated by the system. A report for the company's Assembly Department for the month of March follows: Assembly DepartmentCost ReportFor the Month Ended March 31 Actual Results Planning Budget Variances Machine-hours 25,000 30,000 Variable costs: Supplies $ 7,800 $ 8,400 $ 600 F Scrap 25,200 27,000 1,800 F Indirect materials 75,800 88,500 12,700 F Fixed costs: Wages and salaries 71,500 68,000 3,500 U Equipment depreciation 98,000 98,000 – Total cost $ 278,300 $ 289,900 $ 11,600 F After receiving a copy of this cost report, the supervisor of the Assembly Department stated, “These reports are super.…arrow_forward
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- Sunshine Goods Ltd is a revenue maximizing firm that engages in the analysis of variances to provide useful information to management. The company manufactures and sells three (3) products, RG, KC and MG. During July 2019 the following budgeted and actual results were presented to you the management accountant for analysis: Budgeted Results Product Total Sales $ Volume/units Price $ Contribution margin per unit $ Total contribution margin $ RG 585,000 900 650 820 738,000 KC 500,000 500 1,000 850 425,000 MG 300,000 600 500 720 432,000 Total 2,000 1,595,000 Actual Results Product Total Sales $ Volume/units Price $ Contribution margin per unit $ Total contribution margin $ RG 500,000 500 1,000 800 400,000 KC 270,000 300 900 `900 270,000 MG 105,000 350 300 700 245,000 Total 1,150 915,000 Required: Sales margin quantity…arrow_forwardSunshine Goods Ltd is a revenue maximizing firm that engages in the analysis of variances to provide useful information to management. The company manufactures and sells three (3) products, RG, KC and MG. During July 2019 the following budgeted and actual results were presented to you the management accountant for analysis: Budgeted Results Product Total Sales $ Volume/units Price $ Contribution margin per unit $ Total contribution margin $ RG 585,000 900 650 820 738,000 KC 500,000 500 1,000 850 425,000 MG 300,000 600 500 720 432,000 Total 2,000 1,595,000 Actual Results Product Total Sales $ Volume/units Price $ Contribution margin per unit $ Total contribution margin $ RG 500,000 500 1,000 800 400,000 KC 270,000 300 900 `900 270,000 MG 105,000 350 300 700 245,000 Total 1,150 915,000 Required: Sales margin price…arrow_forward1 Book References Problem 9-18 (Algo) Activity and Spending Variances (LO9-1, LO9-2, LO9-3) 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 $16,500 $0.12 per nachine-hour $30,000+ 81.40 per machine-hour 50.70 per machine-hour $94,100 $1.70 per machine-hour $67,800 Actual Cost in March $ 21,180 $ 66,200 $ 16,600 $ 135,800 $ 69,500 During March, the company worked 22,000 machine-hours and produced…arrow_forward
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