warehouse last month. But they only amounted to a couple of hundred dollars, and just look at this report. Everything is unfavorable." Direct labor wages and supplies are variable costs; supervision and depreciation are fixed costs; and maintenance and utilities are mixed costs. The fixed component of the budgeted maintenance cost is $15,300; the fixed component of the budgeted utilities cost is $13,600. Required: 2. Complete the performance report that will help Mr. Weston's superiors assess how well costs were controlled in the machining department. Note: Do not round your intermediate calculations. 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. Freemont Corporation-Machining Department Flexible Budget Performance Report For the Month Ended June 30 Actual Results Machine-hours 42,000 Direct labor wages S 81.800 Supplies 25.300 Maintenance 24,300 Utilities 22.000 Supervision 49.000 Flexible Budget Planning Budget 40,000 $ 79,600 23,200 21,700 20.300 49,000

warehouse last month. But they only amounted to a couple of hundred dollars, and just look at this report. Everything is unfavorable." Direct labor wages and supplies are variable costs; supervision and depreciation are fixed costs; and maintenance and utilities are mixed costs. The fixed component of the budgeted maintenance cost is $15,300; the fixed component of the budgeted utilities cost is $13,600. Required: 2. Complete the performance report that will help Mr. Weston's superiors assess how well costs were controlled in the machining department. Note: Do not round your intermediate calculations. 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. Freemont Corporation-Machining Department Flexible Budget Performance Report For the Month Ended June 30 Actual Results Machine-hours 42,000 Direct labor wages S 81.800 Supplies 25.300 Maintenance 24,300 Utilities 22.000 Supervision 49.000 Flexible Budget Planning Budget 40,000 $ 79,600 23,200 21,700 20.300 49,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Howard Cooper, the president of Walton Computer Services, needs your help. He wonders about the potential effects on the firm's net income if he changes the service rate that the firm charges its customers. The following basic data pertain to fiscal Year Standard rate and variable costs Service rate per hour Labor cost Overhead cost Selling, general, and administrative cost Expected fixed costs Facility maintenance Selling, general, and administrative $63.00 31.00 5.55 3.40 $ 317,000 122,000 Required: a. Prepare the pro forma income statement that would appear in the master budget if the firm expects to provide 32,000 hours of services in Year 1. b. A marketing consultant suggests to Mr. Cooper that the service rate may affect the number of service hours that the firm can achieve. According to the consultant's analysis, if Walton charges customers $58 per hour, the firm can achieve 35,000 hours of services. Prepare a flexible budget using the consultant's assumption. c. The same…
Howard Cooper, the president of Jordan Computer Services, needs your help. He wonders about the potential effects on the firm's net income if he changes the service rate that the firm charges its customers. The following basic data pertain to fiscal Year 3. Standard rate and variable costs Service rate per hour $ 84.00 Labor cost 33.00 Overhead cost 6.60 Selling, general, and administrative cost Expected fixed costs Facility maintenance Selling, general, and administrative 3.50 $517,000 145,000 Required: a. Prepare the pro forma income statement that would appear in the master budget if the firm expects to provide 31,000 hours of services in Year 3. b. A marketing consultant suggests to Mr. Cooper that the service rate may affect the number of service hours that the firm can achieve. According to the consultant's analysis, if Jordan charges customers $79 per hour, the firm can achieve 39,000 hours of services. Prepare a flexible budget using the consultant's assumption. c. The same…
Deep South Glass Company is exploring different prediction models that can be used to forecast machine maintenance costs. One independent variable under consideration is machine hours. Following are matching observations on machine maintenance costs and machine hours for the past six months: Month Machine hours Machine Maintenance costs 1 300 $20,000 400 $24,000 3 240 $17,000 4 370 $22,000 5 200 $13,000 6 225 $14,000 In a high-low model, which months' observations would be used to compute the model's parameters? 4 and 5 1 and 6 2 and 6 O 2 and 5
The cost of the personnel department at the Mason Company has always been charged to the production departments based upon number of employees. Recently, opinions gathered from the department managers indicated that the number of new hires might also be a predictor of personnel costs to be assigned. Total personnel department costs are $120,000. Department Department Department Cost Driver A B C Number of employees 300 250 50 The number of new hires 15 25 10 Required: Using the above data, prepare a report that contrasts the different amounts of personnel department cost that would be allocated to each of the production departments if the cost driver used is a. number of employees. b. the number of new hires. c. Which cost…
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The controller of Manufacturing Co. has collected the following data on drilling machines: Month Total Cost Total Hours March $12,460 8,100 April $12,000 7,600 May $63,000 30,000 June $14, 740 9,800 July $25,000 20000 August $55,000 22,000 The price per unit of the drilling machines is $25. Please calculate all of the following: Variable Cost and Fixed Cost using the High-Low Method. Breakeven point in units. Breakeven point in dollars using the Contribution Margin Ratio. Margin of Safety Percentage if their sales are $756,000. How many units they would need to sell in order to have a Net Income of…
1.Using the high-low method of analyzing costs, answer the following questions and show computations to support your answers. a. What is the estimated variable portion of maintenance costs per labor hour? 2.What is the estimated fixed maintenance cost each month? 3.Formulate the regression equation 4.If it is estimated that 600 labor hours will be used in July, what is the expected total power cost for July? 5.Using the least-squares method of analyzing costs, answer the following questions and show computations to support your answers. a. What is the estimated variable portion of maintenance costs per labor hour? 5a. What is the estimated fixed maintenance cost each month? 5b.Formulate the regression equation 5c.If it is estimated that 600 labor hours will be used in July, what is the expected total power cost for July?
Adriana Corporation manufactures football equipment. In planning for next year, the managers want to understand the relation between activity and overhead costs. Discussions with the plant supervisor suggest that overhead seems to vary with labor-hours, machine-hours, or both. The following data were collected from last year's operations: Month Labor- Machine- Overhead Costs Hours Hours 1 730 1,363 $ 102,751 725 1,400 103,871 3 685 1,518 109,884 4 750 1,458 108,305 780 1,591 116,127 765 1,589 114,516 7 730 1,391 106,929 8 725 1,301 102,082 705 1,459 106,469 10 790 1,555 113,132 11 670 1,294 100,528 12 705 1,612 113,089
The Stimson Company (TSC) Case Study: TSC had about 130 employees with annual revenue of $15m in 2015. Their core business is the selling of dust control systems. Estimating project costs seems to be the main problem for Project 14321. You are to advise a reward mechanism for TSC management that will help with improving project cost estimation Below points to be noted while answering: Budget revisions and budget adjustments The right balance between motivation/performance and target difficulty Resource allocation issue as it relates to cost estimation
Pavilion Company is using the high-low method to determine the fixed and variable components of its utilities expense, a semivariable cost. Pavilion Company believes direct labor hours is the best activity to measure the cost. In its low month, there were 1,600 direct labor hours and utilities expense was $8,000. In its high month, there were 3,600 direct labor hours and utilities expense was $12,000. Using the high-low method, what is the fixed cost per month, rounded to the nearest whole dollar? $0 $9,231 $4,000 $4,800
Song, Inc., uses the high-low method to analyze cost behavior. The company observed that at 20,000 machine hours of activity, total maintenance costs averaged $34.30 per hour. When activity jumped to 27,000 machine hours, which was still within the relevant range, the average total cost per machine hour was $27.30. On the basis of this information, the variable cost per machine hour was (Round your final answer to 2 decimal places): On the basis of this information, the fixed cost was (Round your Intermedlate calculatlons to 2 declmal places final answer to nearest dollar amount): On the basis of this information, what were total maintenance costs when the company experienced 25,000 machine hours? (Round your Intermedlate calculatlons to 2 declmal places final answer to nearest dollar amount.)
5.) Alpha Manufacturing Corporation has two service departments, Custodial Services and Maintenance, and three production departments, Cutting, Milling, and Assembly. The company allocates the cost of Custodial Services on the basis of square footage and Maintenance on the basis of labor-hours. No distinction is made between variable and fixed costs. Budgeted operating data for the year just completed follow: Service Departments Operating Departments Custodial Maintenance Cutting Milling Assembly Budgeted costs before allocation Square feet Labor-hours $40,000 4,000 $28,000 $160,000 $88,000 $185,000 40,000 50,000 7,000 30,000 3,000 32,000 7,000 Required: a. Prepare a schedule to allocate service department costs to the production departments by the direct method. b. Prepare a schedule to allocate service department costs to the production departments by the step-down method, allocating Custodial Services first.