Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 4, Problem 5P
Listed below are the budgeted
Required:
Prepare flexible budgets for factory overhead at the 1,000, 2,000, and 4,000 unit levels. (Hint: You must first decide which of the listed costs should be considered variable and which should be fixed.)
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Reliance, Inc, utilizes a standard cost system for budget and control purposes.
Flexible budgets are determined and all overbead cost items are assigned on the basis
of standard direct labor hours.
The following standard cost per finished unit was determined on the basis of a
projected monthly normal production for 2020:
Direct materials (3 pounds @ P6.00)
Direct labor (0.30 hour @P40.00)
Variable overhead (0.30 hour @P10)
Fixed overhead (0.30 hour @ P6-2/3)
P18.00
12.00
3.00
2.00
Total
P35.00
You have just received the condensed performance report for the month of
Sept., 2020.
VARIANCE ANALYSIS
Price or
Quantity
or time or
Standard
Сарacity
Costs
Rate
Variances
Direct materials used
Direct labor costs
Applied
P162,000
108,000
Efficiency
P6,000 U
1,200 U
P14,000 F
*18,200 U
5,250 U
1,500 U
Variable overhead
27,000
18,000
300 U
Fixed overhead
P4,000* U
* Includes labor joint variance.
** Includes overhead capacity variance & fixed overhead efficiency variance
The Principles Corporation is a manufacturer of centrifuges. Fixed and variable manufacturing overheads are allocated to each centrifuge using budgeted assembly-hours. Budgeted assembly time is 2 hours per unit. The following table shows
the budgeted amounts and actual results related to overhead for June 2020.
E (Click the icon to view the table.)
Requirements
Read the requirements.
Requirement 1. Prepare an analysis of all variable manufacturing overhead and fixed manufacturing overhead variances.
1.
Prepare an analysis of all variable manufacturing overhead and fixed
manufacturing overhead variances.
Begin by calculating the following amounts for the variable overhead (OH).
2. Prepare journal entries for Principles' June 2020 variable and fixed
manufacturing overhead costs and variances; write off these variances to
Cost of Goods Sold for the quarter ending June 30, 2020.
Actual Input
Actual Costs
Flexible
Allocated
3.
How does the planning and control of variable manufacturing…
<
Deluxe, Inc. uses a standard cost system and provides the following information.
(Click the icon to view the information.)
Deluxe allocates manufacturing overhead to production based on standard direct labor hours. Deluxe reported the following actual results for 2024: actual number of units produced, 1,000, actual
variable overhead, $5,000, actual fixed overhead, $3,200; actual direct labor hours, 1,400.
Read the requirements
Data table
Static budget variable overhead
Static budget fixed overhead
Static budget direct labor hours
Static budget number of units
Standard direct labor hours
Print
The fixed overhead cost variance is
The fixed overhead volume variance is
$2,100
$2,800
1,400 hours
700 units
2 hours per unit
Done
Requirements
1. Compute the variable overhead cost and efficiency variances and fixed
overhead cost and volume variances.
2. Explain why the variances are favorable or unfavorable
irect labor hour was
sed
Print
Done
because the total fixed overhead cost was
because…
Chapter 4 Solutions
Principles of Cost Accounting
Ch. 4 - What are factory overhead expenses, and what...Ch. 4 - What are three categories of factory overhead...Ch. 4 - What are the distinguishing characteristics of...Ch. 4 - When a products cost is composed of fixed and...Ch. 4 - What effect does a change in volume have on total...Ch. 4 - Distinguish between a step-variable cost and a...Ch. 4 - What is the basic premise underlying the high-low...Ch. 4 - What are the advantages and disadvantages of the...Ch. 4 - Differentiate between an independent variable and...Ch. 4 - Prob. 10Q
Ch. 4 - What is a flexible budget, and how can management...Ch. 4 - How does accounting for factory overhead differ in...Ch. 4 - What is the function and use of each of the two...Ch. 4 - What are two types of departments found in a...Ch. 4 - What are the two most frequently used methods of...Ch. 4 - When using the sequential distribution method of...Ch. 4 - When using the sequential distribution method of...Ch. 4 - Is it possible to close the total factory overhead...Ch. 4 - What are the shortcomings of waiting until the...Ch. 4 - What are the two types of budget data needed to...Ch. 4 - Prob. 21QCh. 4 - What factory operating conditions and data are...Ch. 4 - Prob. 23QCh. 4 - How does activity-based costing differ from...Ch. 4 - What steps must a company take to successfully...Ch. 4 - What is the relationship between activity-based...Ch. 4 - Prob. 27QCh. 4 - Prob. 28QCh. 4 - If the factory overhead control account has a...Ch. 4 - Prob. 30QCh. 4 - Classify each of the following items of factory...Ch. 4 - Ames Automotive Company has accumulated the...Ch. 4 - Prob. 3ECh. 4 - Using the data in E4-2 and spreadsheet software,...Ch. 4 - El Paso Products Company has accumulated the...Ch. 4 - Computing unit costs at different levels of...Ch. 4 - Identifying basis for distribution of service...Ch. 4 - A manufacturing company has two service and two...Ch. 4 - A manufacturing company has two service and two...Ch. 4 - Compute the total job cost for each of the...Ch. 4 - Classify each of the following items of factory...Ch. 4 - Job 25AX required 5,000 for direct materials,...Ch. 4 - Job 19AB required 10,000 for direct materials,...Ch. 4 - Match each of the following cost pools with the...Ch. 4 - The books of Petry Products Co. revealed that the...Ch. 4 - The general ledger of Lawson Lumber Co. contains...Ch. 4 - Nelson Fabrication Inc. had a remaining credit...Ch. 4 - Housley Paints Co. had a remaining debit balance...Ch. 4 - The cost behavior patterns below are lettered A...Ch. 4 - Miller Minerals Co. manufactures a product that...Ch. 4 - Scattergraph method Using the data in P4-2 and a...Ch. 4 - Using the data in P4-2 and Microsoft Excel: 1....Ch. 4 - Listed below are the budgeted factory overhead...Ch. 4 - Menlo Materials is divided into five departments,...Ch. 4 - Distribution of service department costs to...Ch. 4 - Journalizing the distribution of service...Ch. 4 - Channel Products Inc. uses the job order cost...Ch. 4 - Determining job costcalculation of predetermined...Ch. 4 - Focus Fabrication Co. uses ABC. The factory...Ch. 4 - Mansfield Manufacturing Co. uses ABC. The factory...Ch. 4 - Hughes Products Inc. uses a job order cost system....Ch. 4 - Abbey Products Company is studying the results of...Ch. 4 - The following information, taken from the books of...Ch. 4 - Rockford Company has four departmental accounts:...Ch. 4 - Luna Manufacturing Inc. completed Job 2525 on May...Ch. 4 - Phillips Products, Inc. had a remaining credit...Ch. 4 - Nathan Industries had a remaining debit balance of...Ch. 4 - Chrome Solutions Company manufactures special...Ch. 4 - Activity-based Costing
Video Options Ltd....
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Emman Corporation is preparing a flexible budget for the next year and requires a breakdown of the factory maintenance cost into the fixed and variable elements. (See picture for the table) Requirement: Find the annual fixed costsarrow_forwardEmman Corporation is preparing a flexible budget for the next year and requires a breakdown of the factory maintenance cost into the fixed and variable elements. (See picture for the table) Requirement: Find the estimated variable ratearrow_forwardCalculate the budgeted manufacturing overhead rate per machine hour. Calculate the amount of under- or over-allocated manufacturing overhead.arrow_forward
- Shannon Corporation manufactures custom cabinets for kitchens. It uses a normal-costing system with two direct-cost categories-direct materials and direct manufacturing labor-and one indirect-cost pool, manufacturing overhead costs. It provides the following information for 2020: (Click the icon to view the information for 2020.) Read the requirement. Begin by calculating the budgeted indirect cost rate. Select the formula and then calculate the rate. (Assume the cost allocation base is direct labor hours.) Data table Budgeted manufacturing overhead costs Budgeted direct manufacturing labor-hours Actual manufacturing overhead costs Actual direct manufacturing labor-hours = Budgeted indirect cost rate 1,024,000 32,000 hours 1,302,000 31,000 hours Xarrow_forwardi need the answer quicklyarrow_forwardSince, the predetermined overhead rate and the budgeted factory overhead is given. We need to calculate the amount of the allocation base in order to know how Mystic Inc. computed its predetermined overhead rate for 2010. Equation to compute the Predetermined Overhead rate: Given: Predetermined Overhead rate = Predetermined rate: $4.25 per direct labor dollar Budgeted Factory Overhead: $1,275,000 Solution: $4.25 = ? = $300,000 = = $300,000 is the budgeted direct labor cost.arrow_forward
- The Cleary Company is in the process of preparing its manufacturing overhead budget for the upcoming year. Sales are projected to be 40,000 units. Information about the various manufacturing overhead costs follows: E (Click the icon to view the manufacturing overhead cost information.) Requirement Prepare the manufacturing overhead budget for the Cleary Company for the upcoming year. Prepare the manufacturing overhead budget by first calculating the total variable manufacturing overhead, then calculate the total fixed manufacturing overhead and total manufacturing overhead. The Cleary Company Manufacturing Overhead Budget - X For the Upcoming Year Data table Projected Sales (Units) Variable manufacturing overhead costs: Variable rate per unit Total fixed costs Indirect materials Supplies Indirect materials.. 1.00 Indirect labor Supplies 1.10 Indirect labor 2$ 0.80 $ 63,000 Plant utilities Plant utilities.... $ 0.20 $ 34,000 Repairs and maintenance Repairs and maintenance. $ 0.40 $…arrow_forwardThe Current Designs staff has prepared the annual manufacturing budget for the rotomolded line based on an estimated annual production of 3,960 kayaks during 2020. Each kayak will require 56 pounds of polyethylene powder and a finishing kit (rope, seat, hardware, etc.). The polyethylene powder used in these kayaks costs $1.00 per pound, and the finishing kits cost $150 each. Each kayak will use two kinds of labor-2 hours of type I labor from people who run the oven and trim the plastic, and 3 hours of work from type II workers who attach the hatches and seat and other hardware. The type I employees are paid $19 per hour, and the type II are paid $16 per hour. Manufacturing overhead is budgeted at $381,520 for 2020, broken down as follows. Variable costs Indirect materials Manufacturing supplies Maintenance and utilities Fixed costs Supervision Insurance Depreciation Total Polyethylene powder Finishing kits Type I labor Type II labor Indirect materials Manufacturing supplies Maintenance…arrow_forwardMeng Company is preparing a flexible budgetfor next year and requires a breakdown of the factory maintenance cost into the fixed and variable elements. The maintenance costs and machine hours (the selected cost driver) for the past six months are as follows: Maintenance costs Machine hours January 15,500 1,800 February 10,720 1,230 March 15,100 1,740 April 15,840 2,190 May 14,800 1,602 June 10,600 1,590 1. If Meng Company uses the high -low method of analysis, the estimated variable rate of maintenance costs per machine is? 2. The average annual fixed maintenance costs amounts to? 3. What is the average rate per hour at a level of 1,500 machine hours? As a part of a cost study, the cost accountant of Shinly Corporation has recorded the cost of operations at seven different level of materials usage. The records show the following: Kilos of Materials cost of operations 80 800 60 480 20 320 120 1,200 140 1.280 40 480 100 1,040 1. Using the high-low method, the variable cost of operations…arrow_forward
- Sweet Acacia Company is preparing its manufacturing overhead budget for 2022. Relevant data are as follows: 1. Units to be produced (by quarters): 9,700, 12,000, 15,100,17,600 2. Direct labour: 1.4 hours per unit 3. Variable overhead costs per direct labour hour: indirect materials $0.70; indirect labour $1.10; and maintenance $0.50 4. Fixed overhead costs per quarter: supervisory salaries $34,900; depreciation $16,400; and maintenance $15,500 Prepare the manufacturing overhead budget for the year, showing quarterly data. (Round variable cost per unit to 2 decimal places, e.g. 15.25.) SWEET ACACIA COMPANY Manufacturing Overhead Budget For the Year Ending December 31, 2022 1 2 Quarter $ $ $ $ $ $ $ $ $ $ Yeararrow_forwardFaras Company is preparing its manufacturing overhead budget for 2020. Relevant data consist of the following. Units to be produced (by quarters): 20,000,24,000, 28,000, 32,000. Direct labor: time is 0.5 hours per unit. Variable overhead costs per direct labor hour: indirect materials OMR0.80; indirect labor OMR1.10; and maintenance OMR0.50. Fixed overhead costs per quarter: supervisory salaries OMR30,000; depreciation OMR15,000; and maintenance OMR,10,000. What is the budgeted total manufacturing overhead cost for quarter 1?arrow_forwardHow to answer this po?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage Learning
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Principles of Cost Accounting
Accounting
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Responsibility Accounting| Responsibility Centers and Segments| US CMA Part 1| US CMA course; Master Budget and Responsibility Accounting-Intro to Managerial Accounting- Su. 2013-Prof. Gershberg; Author: Mera Skill; Rutgers Accounting Web;https://www.youtube.com/watch?v=SYQ4u1BP24g;License: Standard YouTube License, CC-BY