ACC 406 Lecture Notes - Lecture 11: Stabilisation Force In Bosnia And Herzegovina, Sensitivity Analysis, Unit

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23 Nov 2016

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Performance report: compares actual costs with budgeted costs. Static budget: a budget prepared in advance based on a particular level of activity and is not adjusted or altered regardless of any subsequent changes in actual output, revenues or costs. Flexible budget: enables a firm to compute the expected costs per unit and then estimate costs for a range of activity levels or production volumes: before the fact. This type of flexible budget gives the expected outcomes for a range of activity levels of production volumes: after the fact. This flexible budget is based on the actual level of activity achieved in the period. Avor = actual variable oh cost / actual direct labour hours. Variable oh spending variance = measures the aggregate effect of differences between the actual variable oh rate and the standard variable oh rate. Avor = actual variable oh / actual hours. Variable oh spending variance = (avor x ah) (svor x ah) = (avor .

Related Questions

Myers company uses a flexible budget for manufactoring overhead based on direct labor hours.Variable manufactoring overhead costs per direct labor hour as follows.
Indirect labor $1.20
Indirect materials .70
Utilities .20

Fixed overhead costs per month are supervision $4300, Depreciation $2000, and property taxes $700. The company believes it will normally operate in a range of $8100 -12000 direct labor hours per month.

Prepare a monthly manufactoring overhead flexible budget for 2017 for the expected range of activity, using increments of 1300 direct labor hours

manufactoring overhead flexible budget for 2017
Activity level
Direct labor hours _______ ________ ________ ________
Variable costs
Indirect labor _______ ________ _______ _______
Indirect materials ________ ______ _____ ______
Utilities _____ ____ _____ _____
total variable costs _____ _____ _____ _____
Fixed costs
Depreciation _____ _____ _____ _____
Propety taxes _____ ______ ____ ______
Supervision ____ ____ ____ ____
Total fixed costs ____ ____ ____ ____
Total costs ___ _____ ____ ____

whitelizard672

I need some feedback if these are correct.
1.
A flexible budget is a budget that:
A) is updated with actual costs as they occur during theperiod.
B) is updated to reflect the actual level of activity during theperiod.
C) is prepared using a computer spreadsheet application.
D) contains only variable production costs.
2.
Ofarrell Snow Removal's cost formula for its vehicle operating costis $1,840 per month plus $377 per snow-day. For the month ofNovember, the company planned for activity of 14 snow-days, but theactual level of activity was 19 snow-days. The actual vehicleoperating cost for the month was $9,280. The vehicle operating costin the flexible budget for November would be closest to:
A) $9,003
B) $7,118
C) $9,280
D) $9,660
3.
Entler Framing's cost formula for its supplies cost is $2,250 permonth plus $16 per frame. For the month of June, the companyplanned for activity of 502 frames, but the actual level ofactivity was 497 frames. The actual supplies cost for the month was$10,580. The supplies cost in the planning budget for June would beclosest to:
A) $10,580
B) $10,282
C) $10,686
D) $10,202
4.
Johannsen Catering uses two measures of activity, jobs and meals,in the cost formulas in its budgets and performance reports. Thecost formula for catering supplies is $310 per month plus $103 perjob plus $23 per meal. A typical job involves serving a number ofmeals to guests at a corporate function or at a host's home. Thecompany expected its activity in February to be 28 jobs and 187meals, but the actual activity was 26 jobs and 192 meals. Theactual cost for catering supplies in February was $7,620. Thecatering supplies in the flexible budget for February would beclosest to:
A) $7,495
B) $7,404
C) $7,620
D) $6,960
5.
Kimbril Catering uses two measures of activity, jobs and meals, inthe cost formulas in its budgets and performance reports. The costformula for catering supplies is $530 per month plus $91 per jobplus $12 per meal. A typical job involves serving a number of mealsto guests at a corporate function or at a host's home. The companyexpected its activity in January to be 27 jobs and 174 meals, butthe actual activity was 31 jobs and 173 meals. The actual cost forcatering supplies in January was $5,330. The activity variance forcatering supplies in January would be closest to:
A) $255 F
B) $255 U
C) $352 F
D) $352 U
6.
Lapinsky Air uses two measures of activity, flights and passengers,in the cost formulas in its budgets and performance reports. Thecost formula for plane operating costs is $31,400 per month plus$2,148 per flight plus $7 per passenger. The company expected itsactivity in April to be 89 flights and 261 passengers, but theactual activity was 84 flights and 260 passengers. The actual costfor plane operating costs in April was $204,810. The spendingvariance for plane operating costs in April would be closestto:
A) $8,842 U
B) $19,589 F
C) $19,589 U
D) $8,842 F
7.
Velten Corporation's flexible budget performance report for lastmonth shows that actual indirect materials cost, a variable cost,was $45,198 and that the spending variance for indirect materialscost was $9,114 favorable. During that month, the company worked18,600 machine-hours. Budgeted activity for the month had been19,000 machine-hours. The cost formula per machine-hour forindirect materials cost must have been closest to:
A) $1.90
B) $2.86
C) $1.94
D) $2.92
8.
Which of the following comparisons best isolates the impact thatchanges in prices of inputs and outputs have on performance?
A) static planning budget and flexible budget
B) static planning budget and actual results
C) flexible budget and actual results
D) master budget and static planning budget
9.
The excess or deficiency of cash available over disbursements onthe cash budget is calculated as follows:
A) The beginning balance less the expected cash receipts less theexpected cash disbursements.
B) The cash available less the expected cash receipts plus theexpected cash disbursements.
C) The beginning balance plus the expected cash receipts less theexpected cash disbursements.
D) None of the above.
10.
There are various budgets within the master budget. One of thesebudgets is the production budget. Which of the following BESTdescribes the production budget?
A) It details the required direct labor hours.
B) It details the required raw materials purchases.
C) It is calculated based on the sales budget and the desiredending inventory.
D) It summarizes the costs of producing units for the budgetperiod.
1.B
2.A
3.A
4.C
5.D
6.C
7.A
8.B
9.A
10.C

magentabat295

Consider the following information from Grantham Company,then see the instructions that
follow.

Grantham Company manufactures dog whistles. The followinginformation is available from
the budgetary control system for 2016, and was used to createthe master budget. Grantham
applies overhead using an activity index of direct laborhours.

	Variable Costs	Rate per direct labor hour
	Indirect labor	$0.52
	Indirect materials	0.36
	Factory utilities	0.88
	Factory repairs	0.48

	Fixed Costs	Amount per year
	Depreciation	$25,300
	Insurance	9,300
	Property taxes	5,800
	Supervision	61,500

The master overhead budget was prepared with the expectationthat 462,000 direct labor
hours would be worked during the year. In August, 39,500 directlabor hours were worked.
At that level of activity, actual costs were as shown below:

	Variable Costs
	Indirect labor	$0.54	per labor hour
	Indirect materials	0.34	per labor hour
	Factory utilities	0.91	per labor hour
	Factory repairs	0.53	per labor hour

	Fixed Costs
	Depreciation	$2,108
	Insurance	825
	Property taxes	500
	Supervision	5,250

Instructions:
Prepare a monthly manufacturing overhead flexible budget,assuming production levels
ranging from 30,000 to 45,000 direct labor hours, in incrementsof 5,000.

Prepare a budget report for August comparing actual results tothe flexible budget. Explain
whether costs were successfully controlled and how you cantell.

THIS ASSIGNMENT MUST BE COMPLETED IN EXCEL. You should developan efficient and
customizable production cost report, using formulas wheneverpossible instead of keyed in
values. No numeric values except the ones shown above shouldneed to be keyed in.

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ACC 406 Lecture Notes - Lecture 11: Stabilisation Force In Bosnia And Herzegovina, Sensitivity Analysis, Unit

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