Exam 2

Hossack Corporation produces a single product and has the following cost structure: number of units produced each year: 3,000 variable costs per unit: - DM: $17 - DL: $85 - VMOH: $1 - Var. SG+A: $8 fixed costs per year: - FMOH: $90,000 - F SG+A: $270,000 the unit product cost under absorption costing is

$133 per unit

Jenkins Inc: Total flex budget DM costs: $5,000 standard quantity of DM per unit: 40 items budgeted production: 300 units total actual DM costs: $4,500 actual quantity of DM per unit: 42 items actual production: 250 units what is Jenkins' DM efficiency variance?

$250 unfavorable Q P/U R T V 300 40 250 40 .50 5000 - 250 42 .50 5250 - (250) 250 42 4500 r = 250*40*r = 5000 5000/10,000 = .5

Classic Homespun manufactures vintage clothing through a labor-intensive manual process. workers are paid $15/hr. each sweater takes 2.5 hours to knit, and each shirt requires 1 hour of total labor to complete. management has budgeted for 1,500 items to be produced this period. where 60% of items produced are shirts and the remaining item sweaters. what is the total amount budgeted to be paid in direct labor wages for the period?

$36,000 sweaters shirt 600u 900u 2.5hr 1hr = 1500 hr = 900hr x $15 x $15 = 22,500 + = 13,500 = 36000

0 units: $120 500 units: $2,620 1,000 units: $5,120 What is the variable cost per unit?

$5 Q R HI: 1000 5120 LO: 0 120 = 1000 =5000 5000/1000=5

Peterson Corporation produces a single product. Data from the company's records for last year follow: units in BI: 0 units produced: 70,000 units sold: 60,000 Sales: $1,400,000 Manufacturing costs: - Variable: $630,000 - Fixed: $140,000 under variable costing the value of the ending finished goods inventory would be?

$90,000 630,000/70,000 = 9 70,000-60,000 = 10,000 vmoh/units produced x units produced - units sold

Crow Corporation produces a single product and has the following cost structure: Number of units produced each year: 2000 Variable cost per unit: DM $28 DL: $61 VMOH: $6 Var. selling and administrative expense: $7 Fixed costs per year: FMOH: $190,000 Fixed selling and administrative expense: $36,000 the variable costing unit product cost is

$95 per unit DM 28 DL 61 V. S+A 6

a manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: units in BI: 0 units produced: 7,300 units sold: 7,200 units in EI: 100 Variables costs per unit: DM $29 DL $49 VMOH $5 Var. selling and administrative $4 Fixed Costs: FMOH $94,900 Fixed selling and administrative $79,200 what is the absorption costing unit product cost for the month?

$96 per unit DM 29 DL 49 VMOH 5 FMOH 13 (94900/7300)

The WRT Corporation makes collections on sales according to the following schedule: 25% in month of sales 65% in month following sale 5% in second month following sale 5% uncollectible the following sales have been budgeted april sales: $120,000 may sales: $100,000 june sales: $110,000 budgeted cash collection in june would be?

$98,500

Cicchetti Corporation uses customers served as its measure of activity. the following report compares the planning budget to the actual operating results for the month of december: customers served: Actual Budget Var. revenue (4.80q): expenses: - wages and salaries ($36,900 + $1.60q) - supplies ($.90q) - insurance ($13,300) - miscellaneous expense ($6,300 + $.40q) total expense: Net operating income

,

what are advantages of budgeting

- it helps management to get out of just doing things the same way and notice what can be improved - it helps a company achieve their long-range goals - it can be used for performance evaluation - it unifies the efforts of various departments in pursuits of company objectives

what are benefits of flex budget reporting

- provide managers with reasonable cost targets at different levels of production - compare cost performance with budgeted costs at actual levels of production - allow for variance analysis

#3 jacks second exam

..

The Colonial Corporation sells roads for $6.00 per unit. Fixed expenses total $37,500 per month and variable expenses are $2.00 per unit. The number of units that must be sold each month to realize a profit of 15% of sales is closest to: A) 9,375 units B) 9,740 units C) 11,029 units D) 12,097 units

12,097 units sales (12097*6) 72,582 vc (12097*2) 24194 cm 48388 fc 37500 noi 10880 15%*72,582= 10,887.3

Data concerning Nazario Corporations single product appear below: Selling price per unit: $230 Variable expense per unit: $85.10 Fixed expense per month: $188,370 the break-even in monthly unit sales is?

1300

Randt Footwear Corporation's flexible budget cost formula for supplies, a variable cost, is $2.79 per unit of output. The company's flexible budget performance report for last month showed a $5,363 favorable rate variance for supplies. During that month, 17,300 units were produced. Budgeted activity for the month had been 17,200 units. the actual cost per unit for indirect materials must have been closest to: A) $2.48 B) $2.18 C) $2.79 D) $2.17

2.48 Q x R = T V 17,200 2.79 47,988 - activity 17,300 2.79 48,267 - efficiency 17,300 2.48 42,904 - rate 5363 F

Fry Company produces and sell two products, A and B. Data for the most recent month appear below: Price VC/unit % of sales A: $20 $8 40% B: $5 $3 60% Fixed costs are $7200 How many units of A and how many units of B should be produced to break even?

?

a sales budget is given below for one of the products manufactured by the OMI Co.: January: 25,000 units February: 40,000 units March: 65,000 units April: 45,000 units May: 35,000 units June: 30,000 units the inventory of finished goods at the end of each month equals 20% of the next months sales. however, on Dec 31 the finished goods inventory totaled only 4,000 units prepare a budget showing the required production for each month for Jan, Feb, March, and April.

?

to find the unit product cost under variable costing

DM + DL + VMOH

to find the unit product cost under absorption costing

DM + DL + VMOH + FMOH ($/units produced)

to find variances

Q(units) P/U(hrs) R($/hr) T V - flex - efficiency - rate

what is the original metric that determines the levels of all budgets? A) forecasted sales levels B) planned production levels C) approved capital expenditures D) yearly cash flows E) none of the above

a

a static planning budget is

a budget for a single level of activity

the following labor standards have been established for a particular product: standard labor hours per unit of output: 2.8 hours standard labor rate: $11.50 per hour the following data pertain to operations concerning the product for the last month: actual hours worked: 6,900 hours actual total labor cost: $80,385 actual output: 2,300 units a. what is the labor rate variance for the month b. what is the labor efficiency variance for the month

a. 1,035U b. 5,290U

Mahugh Corporation, which has only one product, has provided the following data concerning its most recent month of operations: selling price: $122 units in BI: 0 units produced: 8,300 units sold: 8,200 units in EI: 100 Variable costs per unit: DM: $27 DL: $46 VMOH: $4 Var. selling and administrative $7 Fixed costs: FMOH: $199,200 Fixed selling and administrative: $106,600 a. what is the unit product cost for the month under variable costing? b. what is the unit product cost for the month under absorption costing? c. prepare a contribution format income statement for the month using variable costing d. prepare an income statement for the month using absorption costing e. reconcile the variable costing and absorption costing net operating incomes for the month.

a. 77 (27+46+4) b. 101 (27+46+4+(199,200/8,300)) (absorption: units produced) (variable: units sold) c. sales: 1,000,400 vc: (units sold) DM: 221,400 DL: 377,200 VMOH: 32,800 Var. S+A: 57,400 = 688,800 CM: 311,600 FC: 305,800 (add up all fc) NOI: 5,800 d. sales: 1,000,400 cogs: VMOH: $4 FMOH: $24 (199,200/8,300) DM: $27 DL: $46 = $101 (x 8200) 828,200 GP: 172,200 F+V SG+A: 164,000 NOI: 8,200 e. NOI VC 5800 2400 NOI ABS 8200 or EI (100) x MOH rate ($24)

When preparing a production budget, the required production equals:

budgeted sales - BI - desired EI

Jackson Industries uses a standard cost system in which direct materials inventory is carried at standard cost. Jackson has established the following standards for one unit of product. Standard Q Standard P or Rate Standard Cost DM: 5 pounds $3.60 per pund $18 DL: 1.25 hours $12 per hour $15 during May, Jackson purchased 125,000 pounds of direct material at a total cost of $475,000. the total factory wages for May were $364,000, 90 percent of which were for direct labor. Jackson manufactured 22,000 units of product during May using 108,000 pounds of direct material and 28,000 direct labor-hours. find direct labor rate and direct labor efficiency variance for may

direct labor rate variance for may is $8,400F direct labor efficiency variance for may is $6000U

Comparing actual results to a budget based on the actual activity for the period is possible with the use of a

flexible budget

Max Maching incurs the following utilities costs at different levels of production: 0 units: $120 500 units: $2,620 1,000 units: $5,120 How would utility costs be properly classified?

mixed

absorption costing income statement

sales cogs: - DM - DL - VMOH - FMOH gp F+V SG+A noi

variable costing income statement

sales vc: - DM - DL - VMOH - V SG+A cm fc noi

the standard direct labor per-unit cost is equal to

standard hours x standard wage rate (Q x R)

the budgeted level of activity often differs from the actual level of activity. true or false

true

under variable costing, a company expenses all fixed overhead costs in the same period that it incurs them. true or false

true

Hoppy Corporation compares monthly operating results to a static budget prepared at the beginning of the month. When the actual level of activity is less than budgeted,

variable costs would show favorable variances