Determine the actual MOH rate and the budgeted MOH rate Metlock would have used last year under actual costing and normal costing, respectively. (Round answers to 2 decimal places, e.g. 52.75.)
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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- Albedo Incorporated manufactures high-end replacement telescope lenses for amateur and professional astronomers who are seeking to upgrade the performance of their telescopes. You have just become employed as a staff accountant at Albedo, and Jordan Coleman, the controller, has asked you to help with maintenance cost estimation for the lens manufacturing process. You review the manufacturing process and decide that the best cost driver for maintenance costs is machine hours. The data below are from the previous fiscal year for maintenance costs and machine hours: Month Maintenance Costs Machine Hours $ 3,210 4,650 5,175 3,350 3,100 1 2 3 4 5 6 7 8 9 10 11 12 2,950 2,900 2,900 4,120 4,350 3,500 3,775 2,750 3,900 4,050 2,690 2,500 2,580 2,300 2,500 3,160 3,325 2,780 3,000 Required: 1. What is the cost equation for maintenance costs using the high-low method? (Round "slope (unit variable cost)" to 2 decimal places. Negative amounts should be indicated by a minus sign.)Horton Manufacturing Incorporated produces blinds and other window treatments for residential homes and offices. The owner is concerned about the maintenance costs for the production machinery because maintenance costs for the previous fiscal year were higher than he expected. The owner has asked you to assist in estimating future maintenance costs to better predict the firm's profitability. Together, you have determined that the best cost driver for maintenance costs is machine hours. The data from the previous fiscal year for maintenance costs and machine hours follow: Month Maintenance Costs Machine Hours $ 2,695 2,740 2,790 2,890 2,925 3,025 2,935 1 2 3 4 56789012 10 11 2,975 2,850 2,640 2,660 2,960 Maintenance cost 1,620 1,730 1,745 1,795 1,790 1,890 1,810 1,845 1,835 1,480 1,690 1,495 Required: 1. Use the high-low method to estimate the fixed and variable portions for maintenance costs. (In your calculations, round "slope (uni variable cost)" to 4 decimal places. Enter the "slope…Horton Manufacturing Incorporated produces blinds and other window treatments for residential homes and offices. The owner is concerned about the maintenance costs for the production machinery because maintenance costs for the previous fiscal year were higher than he expected. The owner has asked you to assist in estimating future maintenance costs to better predict the firm's profitability. Together, you have determined that the best cost driver for maintenance costs is machine hours. The data from the previous fiscal year for maintenance costs and machine hours follow: Month Maintenance Costs Machine Hours $ 2,665 2,710 2,760 1 2 3 4 6 7 8 9 10 11 12 2,860 2,895 Maintenance cost 3,045 2,905 2,945 2,820 2,610 2,630 2,930 1,566 1,670 1,685 1,735 1,855 1,890 1,865 1,885 1,775 1,450 1,630 1,465 Required: 1. Use the high-low method to estimate the fixed and variable portions for maintenance costs. (In your calculations, round "slope (unit variable cost)" to 4 decimal places. Enter the…
- Horton Manufacturing Incorporated produces blinds and other window treatments for residential homes and offices. The owner is concerned about the maintenance costs for the production machinery because maintenance costs for the previous fiscal year were higher than he expected. The owner has asked you to assist in estimating future maintenance costs to better predict the firm's profitability. Together, you have determined that the best cost driver for maintenance costs is machine hours. The data from the previous fiscal year for maintenance costs and machine hours follow: Month 1 3 4 6 7 8 9 10 11 12 Maintenance Costs Machine Hours $ 2,665 2,710 2,760 2,860 2,895 3,045 2,905 2,945 2,820 2,610 2,630 2,930 Maintenance cost 1,566 1,670 1,685 1,735 1,855 1,890 1,865 1,885 1,775 1,450 1,630 1,465 Required: 1. Use the high-low method to estimate the fixed and variable portions for maintenance costs. (In your calculations, round "slope (unit variable cost)" to 4 decimal places. Enter the…The managers of Sandusky Inc. have decided to use the month of January to determine the cost of producing their widget for the year. This will help determine proper product pricing and is important for control purposes. Using the data from January, the managers can determine the costs associated with material and labor. However, fixed indirect costs must still be determined. Management intends to use the prior year’s data to determine overhead costs. It is assumed that management will allocate an equal amount of estimated costs each month. Is this an appropriate decision by management? Should January be used as the reference point for the whole year?Maggie Co manufactures two video consoles: handheld and home. The handheld are smaller and less expensive than the home consoles. Since the intro of the home model profits have been steadily declining. Management believes it is because of the inaccurate allocation of costs to the products, particularly since the volume of home console sales have been increasing. Upon investigation, you find that overhead cost is currently assigned to products based on their direct labor costs. Data showed that overhead last year was $1,440,000 based on 28,000 handheld consoles and 10,000 home consoles. Direct materials and direct labor costs were as follows: HANDHELD HOME TOTAL Direct Materials $ 750,000 $ 684,000 $ 1,434,000 Direct Labor 1,160,400 439,600 1,600,000 Management, after a careful study, has determined that overhead are caused by three cost drivers. These cost drivers and their costs for last year are as follows: COST DRIVER ASSIGNED COSTS…
- Waterfun Technology produces engines for recreational boats. Because of competitive pressures, the company was making an effort to reduce costs. As part of this effort, management implemented an activity-based management system and began focusing its attention on processes and activities. Receiving was among the processes (activities) that were carefully studied. The study revealed that the number of receiving orders was a good driver for receiving costs. During the last year, the company incurred fixed receiving costs of $630,000 (salaries of 10 employees). These fixed costs provide a capacity of processing 72,000 receiving orders (7,200 per employee at practical capacity). Management decided that the efficient level for receiving should use 36,000 receiving orders. Required: 1. Explain why receiving would be viewed as a value-added activity. Which of these are possible reasons that explain why the demand for receiving is more than the efficient level of 36,000 orders. 2. Break…Rico Company produces custom-made machine parts. Rico recently has implemented an activity-based management (ABM) system with the objective of reducing costs. Rico has begun analyzing each activity to determine ways to increase its efficiency. Setting up equipment was among the first group of activities to be carefully studied. The study revealed that setup hours was a good driver for the activity. During the last year, the company incurred fixed setup costs of $860,200 (salaries of 17 employees). The fixed costs provide a capacity of 39,100 hours (2,300 per employee at practical capacity). The setup activity was viewed as necessary, and the value- added standard was set at 2,300 hours. Actual setup hours used in the most recent period were 37,110. Required: 1. Calculate the volume and unused capacity variances for the setup activity. Enter all amounts as positive values. Volume Variance 22 Unused Capacity Variance $ Show Me How 2. Prepare a report that presents value-added, non varue…Waterfun Technology produces engines for recreational boats. Because of competitive pressures, the company was making an effort to reduce costs. As part of this effort, management implemented an activity-based management system and began focusing its attention on processes and activities. Receiving was among the processes (activities) that were carefully studied. The study revealed that the number of receiving orders was a good driver for receiving costs. During the last year, the company incurred fixed receiving costs of $630,000 (salaries of 10 employees). These fixed costs provide a capacity of processing 72,000 receiving orders (7,200 per employee at practical capacity). Management decided that the efficient level for receiving should use 36,000 receiving orders. Required: 1. Explain why receiving would be viewed as a value-added activity. List all possible reasons. Also, list some possible reasons that explain why the demand for receiving is more than the efficient level of…
- Santana Rey has found that Business Solutions’s line of computer desks and chairs has become popular, and she is finding it hard to keep up with demand. She knows that she cannot fill all of her orders for both items, so she decides she must determine the optimal sales mix given the resources she has available. Information about the desks and chairs follows. Santana has determined that she only has 1,015 direct labor hours available for the next quarter and wants to optimize her contribution margin given the limited number of direct labor hours available.Cain Components manufactures and distributes various plumbing products used in homes and other buildings. Over time, the production staff has noticed that products they considered easy to make were difficult to sell at margins considered reasonable, while products that seemed to take a lot of staff time were selling well despite recent price increases. A summer intern has suggested that the cost system might be providing misleading information. The controller decided that a good summer project for the intern would be to develop, in one self-contained area of the plant, an alternative cost system with which to compare the current system. The intern identified the following cost pools and, after discussion with some plant personnel, appropriate cost drivers for each pool. There were: Cost Pools Costs Activity Drivers Receiving $ 600,000 Direct material cost Manufacturing 5,500,000 Machine-hours Machine setup 900,000 Production runs Shipping 1,000,000 Units shipped…Cain Components manufactures and distributes various plumbing products used in homes and other buildings. Over time, the production staff has noticed that products they considered easy to make were difficult to sell at margins considered reasonable, while products that seemed to take a lot of staff time were selling well despite recent price increases. A summer intern has suggested that the cost system might be providing misleading information. The controller decided that a good summer project for the intern would be to develop, in one self-contained area of the plant, an alternative cost system with which to compare the current system. The intern identified the following cost pools and, after discussion with some plant personnel, appropriate cost drivers for each pool. There were: Cost Pools Costs Activity Drivers Receiving $ 600,000 Direct material cost Manufacturing 5,500,000 Machine-hours Machine setup 900,000 Production runs Shipping 1,000,000 Units shipped…