Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
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Textbook Question
Chapter 7, Problem 7P
Preparing a performance report
Use the flexible budget prepared in P7-6 for the 31,000-unit level and the actual operating results listed below for the 31,000-unit level.
Required:
- 1. Prepare a performance report.
- 2. List the major reasons why the actual operating income at 31,000 units differs from the
master budget operating income at 30,000 units in Figure 7-12. - 3. Given the level at which the company operated, how was its cost control?
Item
Direct materials:
Direct labor:
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Students have asked these similar questions
Required:
a) Using Activity Based Costing, calculate the rate for each cost driver.
b) Using activity based budgeting, prepare a budgeted yearly operating statement for
Aero3D Ltd. Show the following separately, within the statement.
i. The budgeted output for each product per year;
ii. The contribution to profits for each product and in total before charging
activity based costs;
iii. The profit for each product and in total after charging activity based costs
but before charging core costs (non-activity based costs);
iv. The total profit after charging core based costs.
1. Match each of the following terms with the appropriate definition.
The difference between
actual and budgeted
revenue or cost caused by
the difference between the
actual number of units sold
or used and the budgeted
number of units.
A budget prepared after an
operating period is
complete in order to help
managers evaluate past
performance; uses fixed
and variable costs in
determining total costs.
The costs that should be
incurred under normal
conditions to produce a
specific product or to
perform a specific service.
The difference between
1. Cost Variance
total overhead cost that
would have been expected
if the actual operating
2. Volume Variance
volume had been
accurately predicted and
3. Price Variance
the amount of overhead
cost that was allocated to
products using the
predetermined standard
overhead rate.
4. Quantity Variance
5. Standard Costs
A planning budget based on
a single predicted amount
6. Fixed Budget
of sales or production
volume; unsuitable for
7. Flexible Budget…
Match the definition the term.
Terms:
Cost variance
Overhead cost variance
Price variance
Quantity variance
Standard costs
Sales budget
Production Budget
Balanced scorecard
Profit center
Cost center
Definitions:
1. A plan showing the units of goods to be sold and sales to be derived; usually starting pointing the budgeting process.
2. A system of performance measures, including the nonfinancial measures, used to asses manager performance.
3. A department that incurs cost and genrate revenues, such as a selling department
4. The difference between actual and budgeted sales or cost caused by the difference between the actual per unit and the budgeted price per unit.
5. The difference between actual cost and standard cost, made up of a price variance and a quantity variance.
6. The difference between the total overhead cost actually incurred and the total overhead cost applied to products
7. The difference between the actual budgeted cost caused by…
Chapter 7 Solutions
Principles of Cost Accounting
Ch. 7 - Prob. 1QCh. 7 - Prob. 2QCh. 7 - Prob. 3QCh. 7 - Prob. 4QCh. 7 - Explain zero-based budgeting and how it differs...Ch. 7 - Prob. 6QCh. 7 - Which operating budget must be prepared before the...Ch. 7 - Prob. 8QCh. 7 - Why is it important to have front-line managers...Ch. 7 - If the sales forecast estimates that 50,000 units...
Ch. 7 - What are the advantages and disadvantages of each...Ch. 7 - What three operating budgets can be prepared...Ch. 7 - Prob. 13QCh. 7 - What are the three budgets that are needed in...Ch. 7 - Why might Web-based budgeting be more useful than...Ch. 7 - What is a flexible budget?Ch. 7 - Why is a flexible budget better than a master...Ch. 7 - Why is it important to distinguish between...Ch. 7 - Why is the concept of relevant range important...Ch. 7 - In comparing actual sales revenue to flexible...Ch. 7 - How would you define the following? a. Theoretical...Ch. 7 - Is it possible for a factory to operate at more...Ch. 7 - If a factory operates at 100% of capacity one...Ch. 7 - How is the standard cost per unit for factory...Ch. 7 - When allocating service department costs to...Ch. 7 - The sales department of Macro Manufacturing Co....Ch. 7 - The sales department of F. Pollard Manufacturing...Ch. 7 - Barnes Manufacturing Co. forecast October sales to...Ch. 7 - Prepare a cost of goods sold budget for the Crest...Ch. 7 - Prepare a cost of goods sold budget for MacLaren...Ch. 7 - Roman Inc. has the following totals from its...Ch. 7 - Starburst Inc. has the following items and amounts...Ch. 7 - Using the following per-unit and total amounts,...Ch. 7 - Cortez Manufacturing, Inc. has the following...Ch. 7 - Prob. 10ECh. 7 - Prob. 11ECh. 7 - Prob. 12ECh. 7 - Prob. 13ECh. 7 - Calculating factory overhead The normal capacity...Ch. 7 - The Sales Department of Minimus Inc. has forecast...Ch. 7 - Sales, production, direct materials, direct labor,...Ch. 7 - Budgeted selling and administrative expenses for...Ch. 7 - Prob. 4PCh. 7 - Selling and administrative expense budget and...Ch. 7 - Preparing a flexible budget Use the information in...Ch. 7 - Preparing a performance report Use the flexible...Ch. 7 - Preparing a performance report Use the flexible...Ch. 7 - Flexible budget for factory overhead Presented...Ch. 7 - Prob. 10PCh. 7 - Overhead application rate Creole Manufacturing...Ch. 7 - Overhead application rate Roll Tide Manufacturing...Ch. 7 - Flexible budgeting, performance measurement, and...
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- Preparing a performance report Use the flexible budget prepared in P7-6 for the 29,000-unit level of activity and the actual operating results listed below for the 29,000- unit level. Required: 1. Prepare a performance report. 2. List the major reasons why the actual operating income at 29,000 units differs from the master budget operating income at 30,000 units in Figure 7-12. 3. Given the level at which the company operated, how was its cost control? Item Direct materials: Direct labor:arrow_forwardWhich approach is most likely to result in employee buy-in to the budget? A. top-down approach B. bottom-up approach C. total participation approach D. basing the budget on the prior yeararrow_forwardGiven the following information from Power Enterprises direct materials budget, how much direct materials needs to be purchased?arrow_forward
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