Horngren's Accounting (12th Edition)
12th Edition
ISBN: 9780134486444
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Textbook Question
Chapter 23, Problem P23.26APGA
Preparing a flexible budget computing
2. VOH Eff.Var. $1,368 U
Morton Recliners manufactures leather recliners and uses flexible budgeting and a standard cost system. Worton allocates
Static Budget Actual Results (1,000 recliners) (980 recliners)
| Sales | (1,000 recliners x $505 each) | $505,000 | |
| (980 recliners x 5480 each)Variable |
$1,600 | $470.400 | |
| Direct labor | (6,143 yds.@$8.40yd)(10,000 DLHr@ $9.20/DLHr) | 92,000 | $1,601 |
| Variable Overhead | (9,600 DLHr@$9.20/DLHr)(6,000 yds.@55.20/yd) | 31,200 | 89,280 |
(6,143 yds@ $6.60/yd) 40,544
Fixed Manufacturing Costs
| Fixed Overhead | 60,600 | 62,600 |
| Total Cost of Goods Sold | 235,400 | 244,025 |
| Gross Profit | $269,600 | $226,375 |
Requirements
- Prepare a flexible budget based on the actual number of recliners sold
- Compute the cost variance and the efficiency variance for direct materials and for direct labor, For manufacturing overhead, compute the variable overhead cost, variable overhead efficiency, fixed overhead cost, and fixed overhead volume variances. Round to the nearest dollar.
- Have Morton's managers done a good job or a poor job controlling materials, labor, and overhead costs7Why?
- Describe how Horton’s managers can benefit from the standard cost system.
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Exercise 2:
Draw up a flexible budget for overhead expenses on the basis of the following data and determine
the overhead rates at 70%, 80% and 90% plant capacity.
At 80% Capacity
OMR.
Variable Overheads:
Indirect labor
12,000
4,000
Stores including spares
Semi-variable Overheads:
Power (30% fixed, 70% variable)
20,000
Repairs and maintenance (60% fixed, 40% variable)
2,000
Fixed Overheads:
11,000
Depreciation
3,000
Insurance
10,000
Salaries
62,000
Total Overheads
1,24,000 hrs.
Estimated direct labor hours
W
Current Attempt in Progress
-
Your answer is partially correct.
Threadz is the primary provider of spirit apparel for many high schools. Management has been evaluating two of its key products for
changes in selling price and sales volume in comparison to expectation: the quarter-zip jacket and the hooded sweatshirt. Threadz'
expectations and actual results were as follows.
Quarter-zip
Sweatshirt
Budgeted Sales
Volume
Actual Sales
Volume
Budgeted
Selling Price
Actual
Selling Price
Budgeted Variable
Unit Cost
400
450
$40
$42
$25
600
550
$50
$48
$30
Actual variable costs equaled the flexible budget variable costs. How much was Threadz' sales mix variance this year? How much was
the company's sales quantity variance?
Sales mix variance
$
Sales quantity variance
50
Unfavorable
Neither Favorable nor Unfavorable
LearnCo
PARAGRAPH IS FOR ASSISTANCE TO HELP WITH THE QUESTIONS IN THE IMAGES ONLY WANT THE IMAGES ANWSERED
LearnCo manufactures and sells one product, an abacus for classroom use, with two models, the Basic model and the Deluxe model. The company began operations on January 1, 20Y1, and is planning for 20Y2, its second year of operations, by preparing budgets from its master budget.
The company is trying to decide how many units to manufacture, how much it might spend on direct materials and direct labor, and what their factory overhead expenses might be. In addition, the company is interested in budgeting for selling and administrative costs, and in creating a budgeted income statement showing a prediction of net income for 20Y2.
You have been asked to assist the controller of LearnCo in preparing the 20Y2 budgets.
Sales Budget
The sales budget often uses the prior year’s sales as a starting point, and then sales quantities are revised for various factors such as planned advertising…
Chapter 23 Solutions
Horngren's Accounting (12th Edition)
Ch. 23 - Prob. 1QCCh. 23 - MajorNet Systems is a start-up company that makes...Ch. 23 - MajorNet Systems is a start-up company that makes...Ch. 23 - MajorNet Systems is a start-up company that makes...Ch. 23 - MajorNet Systems has budgeted three hours of...Ch. 23 - MajorNet Systems has budgeted three hours of...Ch. 23 - FrontGrade Systems allocates manufacturing...Ch. 23 - FrontGrade Systems allocates manufacturing...Ch. 23 - FrontGrade Systems allocates manufacturing...Ch. 23 - The person probably most responsible for the...
Ch. 23 - HajorNet System’s static budget predicted...Ch. 23 - What is a variance?Ch. 23 - Explain the difference between a favorable and an...Ch. 23 - What is a static budget performance report?Ch. 23 - How do flexible budgets differ from static...Ch. 23 - How is a flexible budget used?Ch. 23 - What are the two components of the static budget...Ch. 23 - What is a flexible budget performance report?Ch. 23 - What is a standard cost system?Ch. 23 - Explain the difference between a cost standard and...Ch. 23 - Give the general formulas for determining cost and...Ch. 23 - How does the static budget affect cost and...Ch. 23 - List the direct materials variances, and briefly...Ch. 23 - List the direct labor variances, and briefly...Ch. 23 - List the variable overhead variances, and briefly...Ch. 23 - List the fixed overhead variances, and briefly...Ch. 23 - How is the fixed overhead volume variance...Ch. 23 - What is management by exception?Ch. 23 - List the eight product variances and the manager...Ch. 23 - Briefly describe how journal entries differ in a...Ch. 23 - What is a standard cost income statement?Ch. 23 - Matching terms Learning Objective 1 Match each...Ch. 23 - Preparing flexible budgets Learning Objective 1...Ch. 23 - Calculating flexible budget variances Learning...Ch. 23 - Matching terms Learning Objective 2 Match each...Ch. 23 - Identifying the benefits of standard costs...Ch. 23 - Calculating materials variances Learning Objective...Ch. 23 - Calculating labor variances Learning Objective 3...Ch. 23 - Interpreting material and labor variances Learning...Ch. 23 - Computing standard overhead allocation rates...Ch. 23 - Computing overhead variances Learning Objective 4...Ch. 23 - Understanding variance relationships Learning...Ch. 23 - Journalizing materials entries Learning Objectives...Ch. 23 - Journalizing labor entries Learning Objectives 6...Ch. 23 - Preparing a standard cost income statement...Ch. 23 - Preparing a flexible budget Learning Objective 1...Ch. 23 - Preparing a flexible budget performance report...Ch. 23 - Preparing a flexible budget performance report...Ch. 23 - Defining the benefits of setting cost standards...Ch. 23 - Calculating materials and labor variances Learning...Ch. 23 - Computing overhead variances Learning Objective 4...Ch. 23 - Calculating overhead variances Learning Objective...Ch. 23 - Preparing a standard cost income statement...Ch. 23 - Preparing journal entries Learning Objective 6 MOH...Ch. 23 - Preparing a standard cost income statement...Ch. 23 - Preparing a flexible budget performance report...Ch. 23 - Preparing a flexible budget computing standard...Ch. 23 - Computing standard cost variances and reporting to...Ch. 23 - Computing and journalizing standard cost variances...Ch. 23 - Prob. P23.29APGACh. 23 - Preparing a flexible budget performance report...Ch. 23 - Preparing a flexible budget and computing standard...Ch. 23 - Prob. P23.32BPGBCh. 23 - Prob. P23.33BPGBCh. 23 - Preparing a standard cost income statement...Ch. 23 - Prob. P23.35CTCh. 23 - Preparing a flexible budget and performance report...Ch. 23 - Prob. 23.1TIATCCh. 23 - Decision Case 23-1 Suppose you manage the local...Ch. 23 - Fraud Case 23-1 Drew Castello, general manager of...
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