Managerial Accounting
17th Edition
ISBN: 9781260247787
Author: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Publisher: RENT MCG
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Question
Chapter 9, Problem 11E
To determine
Concept Introduction:
Activity variances: These are the differences between the planned and actual budgets caused by the difference in planned and actual activity levels. Inaccurate estimates and
The activity variances of Company L.
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Students have asked these similar questions
Flight Café
Planning Budget
For the Month Ended July 31
Budgeted meals (g)
Revenue ($4.30g)
Expenses:
Raw materials ($2.30g)
Wages and salaries ($6,100 + $0.20g)
Utilities ($1,800 + $0.05g)
Facility rent ($3,200)
Insurance ($2,600)
Miscellaneous ($600 + $0.10g)
Total expense
Net operating income
In July, 21,000 meals were actually served. The company's flexible budget for this level of activity appears below:
Flight Café
Flexible Budget
For the Month Ended July 31
Budgeted meals (g)
Revenue ($4.30g)
Expenses:
Raw materials ($2.30g)
Wages and salaries ($6,100+ $0.20g)
Utilities ($1,800+ $0.05g)
Facility rent ($3,200)
Insurance ($2,600)
Miscellaneous ($600 + $0.10g)
Total expense
Net operating income
Required:
20,000
$ 86,000
46,000
10,100
2,800
3,200
2,600
2,600
67,300
$ 18,700
21,000
$ 90,300
48,300
10,300
2,850
3,200
2,600
2,700
69,950
$ 20,350
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Calculate the activity variances for March. (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.)
FAB Corporation
Activity Variances
For the Month Ended March 31
$ 20,440
Utilities
Maintenance
Supplies
Indirect labor
Depreciation
Total
You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has
asked that you review the company's costing system and "do what you can to help us get better control of our manufacturing
overhead costs." You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be
an excellent first step in overhead planning and control.
After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March:
Actual
Cost in
March
Cost Formula
$20,600 + $0.10 per machine-hour
$40,000 + $1.60 per machine-hour
$0.30 per machine-hour
$24,200
$ 78,100
$8,400
$ 149,600
$ 71,500
Utilities
Maintenance
Supplies
Indirect labor $130,000 + $0.70 per machine-hour
Depreciation
$70,000
During March, the company worked 26,000 machine-hours and produced 15,000 units. The company had originally planned to work
30,000 machine-hours during March.…
Chapter 9 Solutions
Managerial Accounting
Ch. 9 - Prob. 1QCh. 9 - What is a flexible budget and how does it differ...Ch. 9 - Prob. 3QCh. 9 - Why is it difficult to interpret a difference...Ch. 9 - What is an activity variance and what does it...Ch. 9 - Prob. 6QCh. 9 - Prob. 7QCh. 9 - Prob. 8QCh. 9 - Prob. 9QCh. 9 - Prob. 10Q
Ch. 9 - The Excel worksheet form that appears below is to...Ch. 9 - The Excel worksheet form that appears below is to...Ch. 9 - Adger Corporation is a service company that...Ch. 9 - Prob. 2F15Ch. 9 - Prob. 3F15Ch. 9 - Adger Corporation is a service company that...Ch. 9 - Adger Corporation is a service company that...Ch. 9 - Adger Corporation is a service company that...Ch. 9 -
L09-1, LO9-2, LO9-3
Adger Corporation is a...Ch. 9 - Prob. 8F15Ch. 9 - Adger Corporation is a service company that...Ch. 9 - Prob. 10F15Ch. 9 - Prob. 11F15Ch. 9 - Prob. 12F15Ch. 9 - Prob. 13F15Ch. 9 - Prob. 14F15Ch. 9 - Prob. 15F15Ch. 9 - Prob. 1ECh. 9 - Prob. 2ECh. 9 -
EXERCISE 9-3 Revenue and Spending Variances...Ch. 9 - Prob. 4ECh. 9 - Prob. 5ECh. 9 - Prob. 6ECh. 9 - Prob. 7ECh. 9 - Prob. 8ECh. 9 - Prob. 9ECh. 9 - Prob. 10ECh. 9 - Prob. 11ECh. 9 - Prob. 12ECh. 9 - Prob. 13ECh. 9 - Prob. 14ECh. 9 - Prob. 15ECh. 9 - Prob. 16ECh. 9 - Prob. 17PCh. 9 - Prob. 18PCh. 9 - Prob. 19PCh. 9 - Prob. 20PCh. 9 - Prob. 21PCh. 9 - Prob. 22PCh. 9 - Prob. 23PCh. 9 - Prob. 24CCh. 9 - Prob. 25CCh. 9 - Prob. 26C
Knowledge Booster
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- You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company's costing system and "do what you can to help us get better control of our manufacturing overhead costs." You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March: Utilities Maintenance Supplies. Indirect labor Depreciation Cost Formula $16,800+ $0.17 per machine-hour $38,600+ $1.90 per machine-hour $0.40 per machine-hour $94,700+ $2.10 per machine-hour $67,700 Actual Cost in March $ 22,850 $ 79,900 $9,800 $ 148, 100 $ 69,400 During March, the company worked 23,000 machine-hours and produced 17,000 units. The company had originally planned to work 25,000 machine-hours during March.…arrow_forwardces W Actual pounds (q) Revenue ($4.10g) For the Month Ended August 31 Quilcene Oysteria Flexible Budget Expenses: Packing supplies ($0.30q) Oyster bed maintenance ($3,000) Wages and salaries ($2,400 + $0.30q) Shipping ($0.60q) Utilities ($1,270) Other ($470 + $0.019) Total expense Net operating income The actual results for August appear below: Quilcene Oysteria Income Statement For the Month Ended August 31 Actual pounds Revenue Expenses: Packing supplies Oyster bed maintenance Wages and salaries. Shipping Utilities Other Total expense Net operating income 7,200 $ 27,100 2,330 2,860 4,970 4,050 1,080 1,162 16,452 $ 10,648arrow_forwardQuilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,400 pounds of oysters in August. The company's flexible budget for August appears below: Quilcene Oysteria Flexible Budget For the Month Ended August 31 Actual pounds (q) 7,400 Revenue ($4.10q) Expenses: Packing supplies ($0.25q) Oyster bed maintenance ($3,400) Wages and salaries ($2, 100 + $0.45q) Shipping ($0.65q) Utilities ($1, 290) Other ($450 + $0.01g) Total expense $ 30, 340 1, 850 3,400 5,430 4,810 1, 290 524 17,304 $ 13,036 Net operating income The actual results for August appear below: Quilcene Oysteria Income Statement For the Month Ended August 31 Actual pounds 7,400 Revenue $27,500 Expenses: Packing supplies Oyster bed maintenance Wages and salaries Shipping Utilities 2,020 3, 260 5,840 4,540 1, 100 1,144 17,904 Other Total expense Net operating income $9,596arrow_forward
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