Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
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Chapter 7, Problem 10E
To determine
Prepare the performance report for the month of May and identify whether it is a favorable variance or unfavorable variance.
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Tumwater Manufacturing provided you with the following information pertaining to their assembly department for the month of March. Please complete the flexible budget, determine the variances, and label them as favorable (F) or unfavorable (U)
Arrasmith Corporation uses customers served as its measure of activity. During February, the company budgeted for 36,500
customers, but actually served 27,500 customers. The company uses the following revenue and cost formulas in its budgeting, where
q is the number of customers served:
Revenue: $5.00q
Wages and salaries: $34,700 + $1.55q
Supplies: $0.95q
Insurance: $11,900
Miscellaneous expenses: $7,900 + $0.45q
The company reported the following actual results for February:
Revenue
Wages and salaries
Supplies
Insurance
$149,800
$ 69,500
$ 15,900
$ 11,900
$ 25,200
Miscellaneous expense
Required:
Prepare the company's flexible budget performance report for February. Label each variance as favorable (F) or unfavorable (U).
(Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero
variance). Input all amounts as positive values.)
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:
Revenue
Technician wages
Mobile lab operating expenses
Office expenses
Advertising expenses
Insurance
Miscellaneous expenses
Fixed
Variable
Component Component per Actual Total
per Month
for February
$ 38,950
$ 8,150
$ 8,300
$ 4,600
$ 2,800
$ 1,590
$ 2,870
$ 960
Job
$ 278
$34
$4
$2
$ 9,540
$ 3,250
$ 1,660
$ 2,870
$565
The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,600 plus
$34 per job, and the actual mobile lab operating expenses for February were $9,540. The company expected to work 150 jobs in
February, but actually worked 158 jobs.
Required:
Prepare a flexible budget performance report showing AirQual Test Corporation's revenue and spending variances and activity
variances for February.
Note: Indicate the effect of each variance by selecting…
Chapter 7 Solutions
Principles of Cost Accounting
Ch. 7 - Prob. 1QCh. 7 - Prob. 2QCh. 7 - Prob. 3QCh. 7 - Prob. 4QCh. 7 - Explain zero-based budgeting and how it differs...Ch. 7 - Prob. 6QCh. 7 - Which operating budget must be prepared before the...Ch. 7 - Prob. 8QCh. 7 - Why is it important to have front-line managers...Ch. 7 - If the sales forecast estimates that 50,000 units...
Ch. 7 - What are the advantages and disadvantages of each...Ch. 7 - What three operating budgets can be prepared...Ch. 7 - Prob. 13QCh. 7 - What are the three budgets that are needed in...Ch. 7 - Why might Web-based budgeting be more useful than...Ch. 7 - What is a flexible budget?Ch. 7 - Why is a flexible budget better than a master...Ch. 7 - Why is it important to distinguish between...Ch. 7 - Why is the concept of relevant range important...Ch. 7 - In comparing actual sales revenue to flexible...Ch. 7 - How would you define the following? a. Theoretical...Ch. 7 - Is it possible for a factory to operate at more...Ch. 7 - If a factory operates at 100% of capacity one...Ch. 7 - How is the standard cost per unit for factory...Ch. 7 - When allocating service department costs to...Ch. 7 - The sales department of Macro Manufacturing Co....Ch. 7 - The sales department of F. Pollard Manufacturing...Ch. 7 - Barnes Manufacturing Co. forecast October sales to...Ch. 7 - Prepare a cost of goods sold budget for the Crest...Ch. 7 - Prepare a cost of goods sold budget for MacLaren...Ch. 7 - Roman Inc. has the following totals from its...Ch. 7 - Starburst Inc. has the following items and amounts...Ch. 7 - Using the following per-unit and total amounts,...Ch. 7 - Cortez Manufacturing, Inc. has the following...Ch. 7 - Prob. 10ECh. 7 - Prob. 11ECh. 7 - Prob. 12ECh. 7 - Prob. 13ECh. 7 - Calculating factory overhead The normal capacity...Ch. 7 - The Sales Department of Minimus Inc. has forecast...Ch. 7 - Sales, production, direct materials, direct labor,...Ch. 7 - Budgeted selling and administrative expenses for...Ch. 7 - Prob. 4PCh. 7 - Selling and administrative expense budget and...Ch. 7 - Preparing a flexible budget Use the information in...Ch. 7 - Preparing a performance report Use the flexible...Ch. 7 - Preparing a performance report Use the flexible...Ch. 7 - Flexible budget for factory overhead Presented...Ch. 7 - Prob. 10PCh. 7 - Overhead application rate Creole Manufacturing...Ch. 7 - Overhead application rate Roll Tide Manufacturing...Ch. 7 - Flexible budgeting, performance measurement, and...
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