Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN: 9781305970663
Author: Don R. Hansen, Maryanne M. Mowen
Publisher: Cengage Learning
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Textbook Question
Chapter 18, Problem 6CE
Iliff, Inc., produces and sells two types of countertop ovens—the toaster oven and the convection oven. Budgeted and actual data for the two models are shown below.
Budgeted Amounts:
Actual Amounts:
Required:
- 1. Calculate the contribution margin variance.
- 2. What if actual units sold of the convection oven decreased? How would that affect the contribution margin variance? What if actual units sold of the convection oven increased? How would that affect the contribution margin variance?
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K
Juda Recliners manufactures leather recliners and uses flexible budgeting and a standard cost system. Juda allocates
overhead based on yards of direct materials. The company's performance report includes the following selected data:
Data table
X
Sales
Static Budget
Actual Results
(1,025 recliners)
(1,005 recliners)
(1,025 recliners x $515 each)
(1,005 recliners x $480 each)
$
527 875
S
482 400
Variable Manufacturing Costs:
Direct Materials
(6,150 yds @ $8.90/ yd.)
(6,300 yds @ $8.707 yd.)
54.735
54.810
Direct Labor
(10,250 DLHr @ $11.30/DLHr)
(9,850 DLHr @ $11.40/DLHr)
115 825
112 290
Variable Overhead (6,150 yds @ $5.107 yd.)
31,365
(6,300 yds. @$6.50/yd.)
40.950
Fixed Manufacturing Costs:
Fixed Overhead
Total Cost of Goods Sold
62,730
64,730
264,655
272,780
263,220 $
209,620
Gross Profit
Data table
Last month, CenterWare reported the following actual results for the production of 70,000 bottles:
Direct materials.....
1.5 kg per bottle, at a cost of $0.70 per kg
Direct labour......
. 1/4 hour per bottle, at a cost of $13.20 per hour
Actual variable overhead.
......... $104,600
Actual fixed overhead...
$28,700
Done
Data table
The company has these standards:
Direct materials (clay)
1.3 kg per bottle, at a cost of $0.40 per kg
Direct labour...
1/5 hour per bottle, at a cost of $14.40 per hour
Static budget variable overhead ......... $70,500
Static budget fixed overhead.... .... $30,500
Static budget direct labour hours......... 10,000 hours
Static budget number of bottles.......... 52,000
CenterWare allocates manufacturing overhead to production based on standard direct labour
hours.
Print
Done
I
Print
Lynx Corp. manufactures windows and doors. Lynx has been using a standard cost system that bases cost and efficiency standards on Lynx’s historical long-run average performance. Suppose Lynx’s controller has engaged your team of management consultants to advise him or her whether Lynx should use some basis other than historical performance for setting standards.
Requirements
List the types of variances you recommend that Lynx compute (for example, direct materials cost variance for glass). For each variance, what specific standards would Lynx need to develop? In addition to cost standards, do you recommend that Lynx develop any nonfinancial standards?
There are many approaches to setting standards other than simply using long-run average historical costs and quantities.
List three alternative approaches that Lynx could use to set standards, and explain how Lynx could implement each alternative.
Evaluate each alternative method of setting standards, including the pros and cons of…
Chapter 18 Solutions
Cornerstones of Cost Management (Cornerstones Series)
Ch. 18 - Define price elasticity of demand. Give an example...Ch. 18 - What are the features of a perfectly competitive...Ch. 18 - How do you calculate the markup on cost of goods...Ch. 18 - Prob. 4DQCh. 18 - Prob. 5DQCh. 18 - Prob. 6DQCh. 18 - What is price discrimination? Is it legal?Ch. 18 - Prob. 8DQCh. 18 - Prob. 9DQCh. 18 - Suppose that Alpha Company has four product lines,...
Ch. 18 - How does absorption costing differ from variable...Ch. 18 - What are some advantages and disadvantages of...Ch. 18 - Prob. 13DQCh. 18 - Prob. 14DQCh. 18 - Describe the product life cycle. How do unit-level...Ch. 18 - Ventana Window and Wall Treatments Company...Ch. 18 - Kaune Food Products Company manufactures canned...Ch. 18 - Pattison Products, Inc., began operations in...Ch. 18 - Refer to Cornerstone Exercise 18.3. Required: 1....Ch. 18 - Saginaw Company is a garden products wholesale...Ch. 18 - Iliff, Inc., produces and sells two types of...Ch. 18 - Iliff, Inc., produces and sells two types of...Ch. 18 - Refer to Cornerstone Exercise 18.6. Required: 1....Ch. 18 - Budgeted unit sales for the entire countertop oven...Ch. 18 - Prob. 10ECh. 18 - Prob. 11ECh. 18 - Prob. 12ECh. 18 - Prob. 13ECh. 18 - Many different businesses employ markup on cost to...Ch. 18 - Flaherty, Inc., has just completed its first year...Ch. 18 - During its first year of operations, Snobegon,...Ch. 18 - Prob. 17ECh. 18 - Otero Fibers, Inc., specializes in the manufacture...Ch. 18 - Data for Torleson Company are as follows:...Ch. 18 - Eastman, Inc., manufactures and sells three...Ch. 18 - Prob. 21ECh. 18 - The following information pertains to three...Ch. 18 - Thebes Company had the following information: What...Ch. 18 - Banwood Company has the following information for...Ch. 18 - Jasmine Companys expected sales were 2,000 units...Ch. 18 - Prob. 26PCh. 18 - Snyder Company produced 90,000 units during its...Ch. 18 - The following information pertains to Vladamir,...Ch. 18 - Jellison Company had the following operating data...Ch. 18 - San Mateo Optics, Inc., specializes in...Ch. 18 - Haysbert Company provides management services for...Ch. 18 - Sulert, Inc., produces and sells gel-filled ice...Ch. 18 - Prob. 33PCh. 18 - Dana Baird was manager of a new Medical Supplies...Ch. 18 - Bill Fremont, division controller and CMA, was...Ch. 18 - Dantrell Palmer has just been appointed manager of...Ch. 18 - Prob. 37PCh. 18 - Porter Insurance Company has three lines of...Ch. 18 - Porter Insurance Company has three lines of...Ch. 18 - Olin Company manufactures and distributes...Ch. 18 - Shannon, Inc., has two divisions. One produces and...Ch. 18 - Prob. 42P
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