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ACC 406 Chapter Notes - Chapter 11: Cost Driver, Stabilisation Force In Bosnia And Herzegovina

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brownraccoon807
12 Apr 2016
School
Ryerson University
Department
Accounting
Course
ACC 406
Professor
Alison Beavis

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Document Summary

Performance reports: compares actual costs with budgeted costs. Two ways to make comparisons: staic budget. Compare actual costs with budgeted costs for the budgeted level of acivity: flexible budget. Compare actual costs with the actual level of acivity. Staic budget compares "actual costs" for 10,000 units with "budgeted costs" of 8,000. Lexible budget compares "actual costs" for 10,000 units to the "budgeted costs" of 10,000. When an organizaion has a budget, there is an opportunity for variance analysis to understand where expectaions are met. Prepared in advance based on a paricular level of acivity. Not adjusted/altered regardless of any changes in output, revenue or costs. Direct materials, direct labour, and overhead costs (budgeted compared to actual level of acivity) Actual costs and expected costs must be compared at the same level of acivity. Prepare a performance report using a budget based on expected producion. 140 more units were produced than originally budgeted.

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Related Questions

Crafts Inc., is a manufacturer of furniture.
The company has 2 responsibility centers: Production and Selling and Distribution.
Production and administration are cost centers while Selling and Distribution is a profit center.
Presented below are the budgeted and actual contribution income statement for October along with applicable unit information.
Budgeted unit information:
Units 900
Sale price per unit $250
Direct material per unit $50
Direct labor per unit $20
Variable manufacturing overhead per unit $15
Variable selling and distribution per unit 60
Actual Units: 1,000
Craft Inc.
Budgeted Contribution Income Statement
For Month of October
Sales $ 225,000
Less Variable costs
Variable cost of goods sold:
Direct materials $ 45,000
Direct labor 18,000
Manufacturing overhead 13,500 $ 76,500
Selling and distribution 54,000 (130,500)
Contribution Margin 94,500
Less Fixed Costs:
Manufacturing overhead 40,000
Selling and Distribution 30,000 (70,000)
Net Income 24,500
Craft Inc.
Actual Contribution Income Statement
For Month of October
Sales $ 275,000
Less Variable costs
Variable cost of goods sold:
Direct materials $ 50,000
Direct labor 25,000
Manufacturing overhead 20,000 $ 95,000
Selling and distribution 88,000 (183,000)
Contribution Margin 92,000
Less Fixed Costs:
Manufacturing overhead 38,000
Selling and Distribution 40,000 (78,000)
Net Income(Loss) 14,000
Required:
1. Prepare a flexible budget performance report for Production that compares actual and allowed costs.
2. Prepare a flexible budget performance report for selling and distribution that compares actual and allowed costs.
3. Determine the revenue variance.
4. Determine the sales price variance.
5. Determine the sales volume variance.
6. Explain to management the areas that should be investigated. You should also include why the actual income is less than budgeted Explain why you picked these areas to look at.
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

B&L Landscapes, Inc. Mini Practice Part5

WITH EQUETIONS PLEASE, WOULD LIKE TO UNDERSTANDIT

Bill Graham and Larry Miller incorporated B&L Landscapes,Inc. on July 1, 2014. The business consists of lawn care andsprinkler system installations. In addition, they also sell twotypes of fertilizer.

During 2015, B&L Landscapes, Inc. acquired a 30% interest inCrestline Pipe. The president of Crestline wants to develop amanagement report to evaluate Manufacturing Overhead costs. Billand Larry want to help and have volunteered your services toprovide some managerial reporting for Crestline.

Crestline Pipe distributes high-quality PVC pipe and has thefollowing information for the month of March, 2015

Crestline Pipe

Manufacturing Overhead Budget (Static)

For the Month of March, 2015

Budgeted production inLF 117,500

Budgeted costs

Indirect materials ($0.30/DLH) 7,050

Indirect labor($0.50/DLH) 11,750

Utilities($0.40/DLH) 9,400

Maintenance($0.25/DLH) 5,875

Salaries 42,000

Depreciation 16,800

Propertytaxes 2,500

Insurance 1,200

Janitorial 1,300

Total budgetedcosts $97,875

Crestline Pipe

Manufacturing Overhead Costs (Actual)

For the Month of March, 2015

Actual production inLF 118,500

Actual costs

Indirectmaterials) 7,100

Indirectlabor 11,825

Utilities 10,700

Maintenance 5,900

Salaries 42,000

Depreciation 16,800

Propertytaxes 2,500

Insurance 1,200

Janitorial 1,300

Total budgetedcosts $99,325

Crestline Pipe had the following static budget and overheadcosts for March. Manufacturing overhead is budgeted based on directlabor hours (DLH). Direct labor is budgeted at 12 minutes perlinear foot (LF).

Instructions:

Prepare a flexible manufacturing overhead budget based on thefollowing amounts produced.

115,500 LF

116,500 LF

117,500 LF

118,500 LF

119,500 LF

Prepare a flexible budget report showing the differences(favorable and unfavorable) in manufacturing overhead costs for themonth of March. Include your analysis of what variances should beinvestigated further.

Prepare a responsibility report for the manufacturing overheadfor March, assuming only variable costs are controllable. Provide abrief evaluation of how this information could be used to measurethe manufacturing manager’s performance.