Home Appliances Inc. produces washing machines and for 2021 budgeted to produce and sell 30,000 units. The company had no price, spending or efficiency variances and writes off production volume variances to cost of goods sold. Actual data for 2021 are: Units produced Units sold Selling price Variable costs: Manufacturing costs per unit produced 26,000 23,500 $500

Home Appliances Inc. produces washing machines and for 2021 budgeted to produce and sell 30,000 units. The company had no price, spending or efficiency variances and writes off production volume variances to cost of goods sold. Actual data for 2021 are: Units produced Units sold Selling price Variable costs: Manufacturing costs per unit produced 26,000 23,500 $500

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter18: Pricing And Profitability Analysis

Section: Chapter Questions

Problem 15E: Flaherty, Inc., has just completed its first year of operations. The unit costs on a normal costing...

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Flaherty, Inc., has just completed its first year of operations. The unit costs on a normal costing basis are as follows: During the year, the company had the following activity: Actual fixed overhead was 12,000 less than budgeted fixed overhead. Budgeted variable overhead was 5,000 less than the actual variable overhead. The company used an expected actual activity level of 12,000 direct labor hours to compute the predetermined overhead rates. Any overhead variances are closed to Cost of Goods Sold. Required: 1. Compute the unit cost using (a) absorption costing and (b) variable costing. 2. Prepare an absorption-costing income statement. 3. Prepare a variable-costing income statement. 4. Reconcile the difference between the two income statements.
The cost data for Evencoat Paint for the year 2019 is as follows: Using the high-low method, express the companys maintenance costs as an equation where x represents the gallons of paint produced. Then estimate the fixed and variable costs. Predict the maintenance costs i190,000 gallons of paint are produced. Predict the maintenance costs if 81,000 gallons of paint are produced. Using Excel, create a scatter graph of the cost data and explain the relationship between gallons of paint produced and equipment maintenance expenses.
SmokeCity, Inc., manufactures barbeque smokers. Based on past experience, SmokeCity has found that its total annual overhead costs can be represented by the following formula: Overhead cost = 543,000 + 1.34X, where X equals number of smokers. Last year, SmokeCity produced 20,000 smokers. Actual overhead costs for the year were as expected. Required: 1. What is the driver for the overhead activity? 2. What is the total overhead cost incurred by SmokeCity last year? 3. What is the total fixed overhead cost incurred by SmokeCity last year? 4. What is the total variable overhead cost incurred by SmokeCity last year? 5. What is the overhead cost per unit produced? 6. What is the fixed overhead cost per unit? 7. What is the variable overhead cost per unit? 8. Recalculate Requirements 5, 6, and 7 for the following levels of production: (a) 19,500 units and (b) 21,600 units. (Round your answers to the nearest cent.) Explain this outcome.
Carlo Lee Corp. has established the following standard cost per unit: Although 10,000 units were budgeted, only 8,800 units were produced. The purchasing department bought 55,000 lb of materials at a cost of $123,750. Actual pounds of materials used were 54,305. Direct labor cost was $186,550 for 18,200 hours worked. Required: Make journal entries to record the materials transactions, assuming that the materials price variance was recorded at the time of purchase. Make journal entries to record the labor variances.
Speedy Motors assembles and sells motor vehicles and uses standard costing. Actual data relating to April and May 2020 are as follows: LOADING... (Click the icon to view the data.) The selling price per vehicle is $25,000. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 500 units. There are no price, efficiency, or spending variances. Any production-volume variance is written off to cost of goods sold in the month in which it occurs. Read the requirements LOADING... . Requirement 1. Prepare April and May 2020 income statements for Speedy Motors under (a) variable costing and (b) absorption costing. (a) Prepare April and May 2020 income statements for Speedy Motors under variable costing. Complete the top half of the income statement for each month first, then complete the bottom portion. (Complete all input fields. Enter a "0" for any zero balance accounts.) April 2020 May 2020…
The Mulenga & Co. Ltd is a single-product manufacturing company, which uses a marginal costing system for internal management purposes. The year-end external reports are converted to absorption costs. Variances are charged to the cost of goods sold. The following data refers to the years ended 31 December 2020 and 2021: 2020 2021 K K Sales price per unit 80 90 Standard marginal cost per unit: Direct materials 21 23 Direct Labour…
Good Deal, Inc. uses a standard cost system and provides the following information. Good Deal allocates manufacturing overhead to production based on standard direct labor hours. Good Deal reported the following actual results for 2024: actual number of units produced, 1,000; actual variable overhead, $5,000; actual fixed overhead, $3,400; actual direct labor hours, 1,900. Requirement 1. Compute the variable overhead cost and efficiency variances and fixed overhead cost and volume variances. Show all computations. Begin with the variable overhead cost and efficiency variances. Select the required formulas, compute the variable overhead cost and efficiency variances, and identify whether each variance is favorable (F) or unfavorable (U).(Abbreviations used: AC = actual cost; AQ = actual quantity; FOH = fixed overhead; SC = standard cost; SQ = standard quantity; VOH = variable overhead.) Data table has the following Static budget variable…
Tempus, Inc. manufactures clocks and uses a standard costing system. Tempus uses direct labor-hours to allocate fixed overhead. Here are the company's data regarding budgeted and actual fixed overhead for 2020: Actual Static Budget Output (in units = clocks) 500,000 units 480,000 units Total direct labor hours (DLH) 240,000 DLH Total fixed overhead costs $756,000 $720,000 A. Calculate all fixed overhead variances and any overapplied or underapplied fixed overhead. Show all answers and well-labeled supporting calculations on the worksheet. B. Record journal entries for all fixed overhead activity for the year, including recording the variances and the required closing journal entries at year-end. Use the blank general journal on page 3 of the worksheet.
Mission Company is preparing its annual profit plan. As part of its analysis of the profitability of individual products, the controller estimates the amount of overhead that should be allocated to the individual product lines from the information provided below (CMA adapted) Multiple Choice Units produced Material moves per product line Direct labor-hours per product line Budgeted material handling costs: $594,000 Under a traditional costing system that allocates overhead on the basis of direct labor-hours, the materials handling costs allocated to one unit of Wall Mirrors would be O $1000 $1.350 $5,400 Wall Mirrors 210 5 1,050 $22.000 Specialty Nindows 25 46
The Shatontola Co. Ltd is a single-product manufacturing company, which uses a marginal costing system for internal management purposes. The year-end external reports are converted to absorption costs. Variances are charged to the cost of goods sold. The following data refers to the years ended 31 December 2020 and 2021: 2020 2021 K K Sales price per unit 80 90 Standard marginal cost per unit: Direct materials 21 23 Direct Labour…
speedt Motors assembles and sells motor vehicles and uses standard costing. Actual data relating to April and May 2020are as follows the selling price per vehicle is $30,000.The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 400units. There are no price, efficiency, or spending variances. Any production-volume variance is written off to cost of goods sold in the month in which it occurs. a) Prepare April and May 2020 income statements for Speedy Motors under variable costing. Complete the top half of the income statement for each month first, then complete the bottom portio
Alcal Partners uses absorption costing based on standard costs and reports the following data for 2021: Theoretical capacity 360 000 units Practical capacity 300 000 units Normal capacity 240 000 units Selling price R30 per unit Beginning inventory 25 000 units Production 260 000 units Sales volume 280 000 units Variable budgeted manufacturing cost R3 per unit Total budgeted fixed manufacturing costs R3 600 000 Total budgeted operating costs (all fixed) R1 000 000 The production volume variance is written off to cost of goods sold. For each choice of denominator level, the budgeted production cost per unit is also the cost per unit of beginning inventory. Required: 3.1 Calculate the production volume variance in 2021 when the denominator level is: a. theoretical capacity b. practical capacity c. normal capacity 3.2 Prepare absorption costing income statement of Alcal Partners using…