Cost Accounting Exam 2
Variable and fixed manufacturing costs
-- are subtracted from sales to calculate gross margin.
Absorption costing
-- is a method of inventory costing in which all variable manufacturing costs and all fixed manufacturing costs are included as inventoriable costs.
Variable costing
-- is a method of inventory costing in which only variable manufacturing costs are included as inventoriable costs.
Absorption costing
-- method includes fixed manufacturing overhead costs as inventoriable costs.
30,160 mattresses; Number of mattresses to be produced in January= 29,000 units (estimated sales) + 8,160 units (budgeted ending inventory for January x 20%) - 7,000 units (beginning inventory)
Furniture, Inc., estimates the following number of mattress sales for the first four months of 2019: January: 29,000 February: 40,800 March: 34,600 April: 36,200 Finished goods inventory at the end of December is 7,000 units. Target ending finished goods inventory is 20% of the next month's sales. How many mattresses need to be produced in January 2019?
$8,000 unfavorable Explanation: $40 x [1,000 - (4,000 x 0.20)]
Genent Industries, Inc. (GII), developed standard costs for direct material and direct labor. In 2017, GII estimated the following standard costs for one of their major products, the 30-gallon heavy-duty plastic container. Budgeted Quantity. Budgeted Price direct mat: 0.20 pounds $40 per pound direct labor: 0.10 hours $18 per hour During July, GII produced and sold 4,000 containers using 1,000 pounds of direct materials at an average cost per pound of $37 and 475 direct manufacturing labor hours at an average wage of $18.75 per hour. The direct material efficiency variance during July is --.
$4,800 unfavorable [(1,350 x $48) - (4,000 x 0.30 x $50)
Genent Industries, Inc. (GII), developed standard costs for direct material and direct labor. In 2017, GII estimated the following standard costs for one of their major products, the 30-gallon heavy-duty plastic container. Budgeted Quantity. Budgeted Price direct mat: 0.30 pounds $50 per pound direct labor: 0.60 hours $12 per hour During July, GII produced and sold 4,000 containers using 1,350 pounds of direct materials at an average cost per pound of $48 and 2,450 direct manufacturing labor hours at an average wage of $12.25 per hour. July's direct material flexible-budget variance is --.
$8,500 favorable [1,700 x ($20-$15)]
Genent Industries, Inc. (GII), developed standard costs for direct material and direct labor. In 2017, GII estimated the following standard costs for one of their major products, the 30-gallon heavy-duty plastic container. Budgeted Quantity. Budgeted Price direct mat: 0.40 pounds $20 per pound direct labor: 0.80 hours $15 per hour During July, GII produced and sold 4,000 containers using 1,700 pounds of direct materials at an average cost per pound of $15 and 23,225 direct manufacturing labor hours at an average wage of $15.25 per hour. The direct material price variance during July is --.
$115,000 unfavorable [23,000 x ($75-$70)]
Heavy Products, Inc., developed standard costs for direct material and direct labor. In 2017, AII estimated the following standard costs for one of their major products, the 10-gallon plastic container. Budgeted Quantity. Budgeted Price direct mat: 0.70 pounds $70 per pound direct labor: 0.10 hours $35 per hour During June, Heavy Products produced and sold 25,000 containers using 25,000 pounds of direct materials at an average cost per pound of $75 and 17,500 direct manufacturing labor-hours at an average wage of $35.75 per hour. The direct material price variance during June is --.
$880,000 unfavorable [(25,000 x $64) - (15,000 x 0.80 x $60)]
Heavy Products, Inc., developed standard costs for direct material and direct labor. In 2017, AII estimated the following standard costs for one of their major products, the 10-gallon plastic container. Budgeted Quantity. Budgeted Price direct mat: 0.80 pounds $60 per pound direct labor: 0.10 hours $20 per hour During June, Heavy Products produced and sold 15,000 containers using 25,000 pounds of direct materials at an average cost per pound of $64 and 12,000 direct manufacturing labor-hours at an average wage of $21.56 per hour. June's direct material flexible-budget variance is --.
$621,000 Explanation: Fixed overhead cost per machine hour = $634,500/14,100 = $45 Machine hours per unit = 14,100/23,500 = 0.6 Fixed overhead cost per unit = $45 x 0.6 = $27.00 Fixed overhead allocated = 23,000 x $27.00 = $621,000
Hockey Accessories Corporation manufactured 23,000 duffle bags during March. The following fixed overhead data relates to March: - Actual. - Static Budget Production: 23,000 units. 23,500 units Machine-hrs.: 13,100 hrs. 14,100 hrs. Fixed over. costs for March: $626,100 $634,500 What is the amount of fixed overhead allocated to production?
Fixed Costs
In flexible budgets the costs that are not "flexed" because they remain the same within a relevant range of activity (such as sales or output) are called --.
sales budget
In general, which of the following budgets is prepared first?
$123.60 per unit Explanation: Budgeted fleet hours per unit = 568/710 = 0.8 Budgeted var. over. rate per mach. hour = 87,756/568 = $154.50 Budgeted var. man. over. cost per unit = 0.8 x $154.50 = $123.60
J&J Materials and Construction Corporation produces mulch and distributes the product by using dump trucks. The company uses budgeted fleet hours to allocate variable manufacturing overhead. The following information pertains to the company's manufacturing overhead data: Budgeted output units: 710 truckloads Budgeted fleet hours: 568 hours Budge. var. man. over. costs for 710 loads: $87,756 Act. output units produced & delivered: 635 truckloads Actual fleet hours: 468 hours Act. var. man. overhead costs: $82,896 What is the budgeted variable manufacturing overhead cost per unit?
$907,551 Explanation: Total sales: $500 x 2,700 units = $1,350,000 Total COGS: [$130 + ($105,000/3,100 units)] x 2,700 units = $442,449 Gross margin under absorption costing: $1,350,000 - $442,449 = $907,551
Jean Peck's Furniture manufactures tables for hospitality sector. It takes only bulk orders and each table is sold for $500 after negotiations. In the month of January, it manufactures 3,100 tables and sells 2,700 tables. Actual fixed costs are the same as the amount of fixed costs budgeted for the month. The following information is provided for the month of January: Variable manufacturing costs: $130 per unit Fixed manufacturing costs: $105,000 per month Fixed administrative expenses: $30,000 per month At the end of the month Jean Peck's Furniture has an ending inventory of finished goods of 400 units. The company also incurs a sales commission of $13 per unit. What is the gross margin when using absorption costing? (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar.)
$306,000 Explanation: Budg. machine hours per unit= 24,000/8,000 = 3 Budg. machine hours allowed for 8,500 units= 8,500 x 3 = 25,500 Budg. var. overhead rate per mach. hour= $288,000/24,000 = $12.00 Flexible-budget amount = 25,500 x $12.00 = $306,000
Lancelot Corporation manufactures tennis gear and uses budgeted machine hours to allocate variable manufacturing overhead. The following information relates to the company's manufacturing overhead data: Budgeted output units: 8,000 units Budgeted machine-hours: 24,000 hours Budge. var. man. over. costs for 8,000 units: $288,000 Actual output units produced: 8,500 units Actual machine hours used: 23,750 hours Act. var. man. overhead costs: $250,000 What is the flexible-budget amount for variable manufacturing overhead?
$7.20 per unit Explanation: Budg. machine hours per unit= 28,500/9500 = 3 Budg. var. over. rate per machine hour = $68,400/28,500 = $2.40 Budg. var. man. overhead cost per unit = 3 x $2.40 = $7.20
Lancelot Corporation manufactures tennis gear and uses budgeted machine hours to allocate variable manufacturing overhead. The following information relates to the company's manufacturing overhead data: Budgeted output units: 9,500 units Budgeted machine-hours: 28,500 hours Budge. var. man. over. costs for 9,500 units: $68,400 Actual output units produced: 9,800 units Actual machine hours used: 28,100 hours Act. var. man. overhead costs: $250,000 What is the amount of the budgeted variable manufacturing overhead cost per unit?
$181,000 favorable Explanation: Actual Results. Static Budget. Static-budget Var. units sold: 43,000 33,000 revenues: 774,000 594,000 180,000 F var. costs: 166,000 150,000 16,000 U contr. margin: 608,000 444,000 164,000 F fixed costs: 41,000 58,000 17,000 F op. income: 567,000 386,000 181,000 F
Lincoln Corporation used the following data to evaluate their current operating system. The company sells items for $18 each and used a budgeted selling price of $18 per unit. Units sold: Actual=43,000 units; Budgeted=33,000 units Variable costs: Actual=$166,000; Budgeted=$150,000 Fixed costs: Actual=$41,000; Budgeted=$58,000 What is the static-budget variance of operating income?
$11,000 unfavorable ($161,000-$150,000)
Lincoln Corporation used the following data to evaluate their current operating system. The company sells items for $18 each and used a budgeted selling price of $18 per unit. Units sold: Actual=45,000 units; Budgeted=31,000 units Variable costs: Actual=$161,000; Budgeted=$150,000 Fixed costs: Actual=$44,000; Budgeted=$50,000 What is the static-budget variance of variable costs?
$409, 185 Explanation: Budg. machine hours per unit= 17,085/28,475= 0.6 Budg. machine hours allowed for 32,475 units= 32,475 x 0.6 = 19,485 Budg. var. overhead rate per mach. hour= $358,785/17,085 = $21.00 Flexible-Budget amount = 19,485 x $21.00 = $409,185
Majestic Corporation manufactures wheel barrows and uses budgeted machine hours to allocate variable manufacturing overhead. The following information relates to the company's manufacturing overhead data: Budgeted output units: 28,475 units Budgeted machine-hours: 17,085 hours Budge. var. man. over. costs for 28,475 units: $358,785 Actual output units produced: 32,475 units Actual machine hours used: 15,000 hours Act. var. man. overhead costs: $384,060 What is the flexible-budget amount for variable manufacturing overhead?
$35,309 unfavorable Explanation: Budg. machine hours per unit= 17,400/43,500 = 0.4 Budg. machine hours allowed for 45,500 units= 45,500 x 0.4 = 18,200 Budg. var. overhead rate per mach. hour= $382,800/17,400 = $22.00 Flexible-budget amount = 18,200 x $22.00 = $400,400 Flexible-budget variance= $435,709 - $400,400 = $35,309
Majestic Corporation manufactures wheel barrows and uses budgeted machine hours to allocate variable manufacturing overhead. The following information relates to the company's manufacturing overhead data: Budgeted output units: 43,500 units Budgeted machine-hours: 17,400 hours Budge. var. man. over. costs for 43,500 units: $382,800 Actual output units produced: 45,500 units Actual machine hours used: 14,500 hours Act. var. man. overhead costs: $435,709 What is the flexible-budget variance for variable manufacturing overhead?
Variable Manufacturing Overhead Control 270,000 Accounts Payable Control & other Accounts 270,000
Marshall Company uses a standard cost system. In March, $270,000 of variable manufacturing overhead costs were incurred and the flexible-budget amount for the month was $310,000. Which of the following variable manufacturing overhead entries would have been recorded for March?
$680 favorable Explanation: [1,160 doh - (2,000 x 0.600] x $17.00
Mid City Products Inc. (MCP), developed standard costs for direct material and direct labor. In 2017, MCP estimated the following standard costs for one of their most popular products. Budgeted Quantity. Budgeted Price direct mat: 4 pounds $7.25 per pound direct labor: 0.60 hours $17 per hour During September, MCP produced and sold 2,000 containers using 8,200 pounds of direct materials at an average cost per pound of $7 and 1,160 direct manufacturing labor hours at an average wage of $17.50 per hour. The direct labor efficiency variance during September is --.
$142.50 unfavorable [950 dlh x ($15.15 - $15.00)]
Mid City Products Inc. (MCP), developed standard costs for direct material and direct labor. In 2017, MCP estimated the following standard costs for one of their most popular products. Budgeted Quantity. Budgeted Price direct mat: 6 pounds $4.25 per pound direct labor: 0.50 hours $15 per hour During September, MCP produced and sold 2,000 containers using 12,400 pounds of direct materials at an average cost per pound of $4 and 950 direct manufacturing labor hours at an average wage of $15.15 per hour. The direct labor price variance during September is --.
$120.00 favorable [(950 x $10.40) - (2,000 x 0.50 x $10.00)]
Mid City Products Inc. (MCP), developed standard costs for direct material and direct labor. In 2017, MCP estimated the following standard costs for one of their most popular products. Budgeted Quantity. Budgeted Price direct mat: 7 pounds $7.30 per pound direct labor: 0.50 hours $10 per hour During September, MCP produced and sold 2,000 containers using 14,400 pounds of direct materials at an average cost per pound of $7 and 950 direct manufacturing labor hours at an average wage of $10.40 per hour. The direct labor flexible-budget variance during September is --.
Subtracting fixed manufacturing overhead in beginning inventory from fixed manufacturing overhead in ending inventory
One possible means of determining the difference between operating incomes for absorption costing and variable costing is by --.
26,000 units; # of units to be produced=23,000 units (estimated sales) + 9,000 units (budgeted ending inventory) - 6,000 units (opening inventory)
Orange corporation has budgeted sales of 23,000 units, targeted ending finished goods inventory of 9,000 units, and beginning finished goods inventory of 6,000 units. How many units should be produced next year?
A $80,000 unfavorable efficiency variance was recorded
Osium Company made the following journal entry: Variable man. overhead allocated 250,000 Var. man. over. efficiency variance 80,000 Variable man. overhead control 300,000 Variable. man. over. spending var. 30,000 Which of the following statements is true of the given journal entry?
$1,482 unfavorable; [$1,300 (U) + $182 (U) = $1,482 (U)]
Outdoor Gear Corporation manufactured 1,000 coolers during October. The following variable overhead data relates to October: Variable overhead spending variance: $1,300 unfav. Variable overhead efficiency variance: $182 unfavorable Budg. mach. hrs. allowed for act. output: 608 mach. hrs. Actual cost per machine hour: $28 Budgeted cost per machine hour: $26 Calculate the variable overhead flexible-budget variance.
$21,000 favorable Explanation: Fixed cost per machine hour = $204,000/10,200 = $20 Machine hours per unit = 10,200/34,000 = 0.3 Fixed cost per unit = $20 x 0.3 = $6.00 Fixed overhead allocated = 37,500 x $6.00 = $225,000 Fixed over. production-vol. var. = $204,000 - $225,000 = $21,000 F
Radon Corporation manufactured 37,500 units during March. The following fixed overhead data pertain to March: - Actual. - Static Budget Production: 37,500 units. 34,000 units Machine-hrs.: 10,375 hrs. 10,200 hrs. Fixed over. costs for March: $213,200 $204,000 What is the fixed overhead production-volume variance?
$6,212.50 favorable; [8,325 - (17,000 x 9,500/19,000)mh] x $35.50
Russo Corporation manufactured 17,000 air conditioners during November. The variable overhead cost allocation rate is $35.50 per machine-hour. The following variable overhead data pertain to November: - Actual. - Budgeted Production: 17,000 units. 19,000 units Machine-hrs.: 8,325 hrs. 9,500 hrs. Var. over. cost per mach. hr.: $35.00 $35.50 What is the variable overhead efficiency variance?
$204,000 favorable ($1,081,000 - $1,285,000)
Schooner Corporation used the following data to evaluate its current operating system. The company sells items for $25 each and used a budgeted selling price of $25 per unit. Units sold: Actual=173,000 units; Budgeted=181,000 units Variable costs: Actual=$1,081,000; Budgeted=$1,285,000 Fixed costs: Actual=$806,000; Budgeted=$770,000 What is the static-budget variance of variable costs?
$124,200 Explanation: Total sales: $98 x 1,800 = $176,400 Variable COGS: $23 x 1,800 = $41,400 Variable marketing costs: $6 x 1,800 = $10,800 Total variable costs: $52,200 Contribution margin: $176,400 - $52,200 = $124,200
Swan Textiles Inc. produces and sells a decorative pillow for $98.00 per unit. In the first month of operation, 2,300 units were produced and 1,800 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes: Variable manufacturing costs: $23 per unit Variable marketing costs: $6 per unit Fixed manufacturing costs: $15 per unit Administrative expenses, all fixed: $21 per unit Ending Inventories: Direct materials=0; WIP=0; Finished goods=500 units What is the contribution margin using variable costing?
$41,400 [$23.00 x 1,800 units]
Swansea Finishing produces and sells a decorative pillow for $100.00 per unit. In the first month of operation, 2,000 units were produced and 1,800 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes: Variable manufacturing costs: $23 per unit Variable marketing costs: $5 per unit Fixed manufacturing costs: $13 per unit Administrative expenses, all fixed: $19.50 per unit Ending Inventories: Direct materials=0; WIP=0; Finished goods=200 units What is cost of goods sold using variable costing?
Work-in-process control debited for 240,000 & Variable manufacturing overhead allocated credited for 240,000
Teddy Company uses a standard cost system. In May, $234,000 of variable manufacturing overhead costs were incurred and the flexible-budget amount for the month was $240,000. Which of the following variable manufacturing overhead entries would have been recorded for May?
$570,000
The actual information pertains to the month of June. As a part of the budgeting process, Colonial Fencing Company developed the following static budget for September. Colonial is in the process of preparing the flexible budget and understanding the results. Actual Results. Static Budget. Static-budget Var. sales vol: 19,000 -- 20,500 revenues: 510,000 -- $615,000 var. costs: 256,000 -- 300,000 contr. margin: 254,000 -- 315,000 fixed costs: 235,000 -- 228,000 op. profit: 19,000 -- 87,000 The flexible budget for sales revenue will be?
$363,060 (18,000 units x $463,910/23,000 = $363,060
The actual information pertains to the month of June. As a part of the budgeting process, Great Cabinets Company developed the following static budget for June. Great Cabinets is in the process of preparing the flexible budget and understanding the results. Actual Results. Static Budget. Static-budget Var. sales vol: 18,000 -- 23,000 revenues: 900,000 -- $1,150,000 var. costs: 360,000 -- 463,910 contr. margin: 540,000 -- 686,090 fixed costs: 275,300 -- 269,500 op. profit: 264,700 -- 416,590 The flexible budget will report -- for variable costs?
$63,000 favorable [(10,000 x $184,000/8,000) - $167,000]
The actual information pertains to the third quarter. As part of the budgeting process, the Duck Decoy Department of Paralith Incorporated had developed the following static budget for the third quarter. Duck Decoy is in the process of preparing the flexible budget and understanding the results. Actual Results. Static Budget. Static-budget Var. sales vol: 10,000 -- 8,000 revenues: 239,000 -- $235,000 var. costs: 167,000 -- 184,000 contr. margin: 72,000 -- 51,000 fixed costs: 38,000 -- 33,000 op. profit: 34,000 -- 18,000 The flexible budget variance for variable costs is --.
$250,909 (15,000 units x $184,000/11,000)
The actual information pertains to the third quarter. As part of the budgeting process, the Duck Decoy Department of Paralith Incorporated had developed the following static budget for the third quarter. Duck Decoy is in the process of preparing the flexible budget and understanding the results. Actual Results. Static Budget. Static-budget Var. sales vol: 15,000 -- 11,000 revenues: 245,000 -- $235,000 var. costs: 139,000 -- 184,000 contr. margin: 106,000 -- 51,000 fixed costs: 42,000 -- 31,000 op. profit: 64,000 -- 20,000 The flexible budget will report -- for variable costs?
$31,000 (given in the static budget)
The actual information pertains to the third quarter. As part of the budgeting process, the Duck Decoy Department of Paralith Incorporated had developed the following static budget for the third quarter. Duck Decoy is in the process of preparing the flexible budget and understanding the results. Actual Results. Static Budget. Static-budget Var. sales vol: 15,000 -- 13,000 revenues: 236,000 -- $234,000 var. costs: 166,000 -- 182,000 contr. margin: 70,000 -- 52,000 fixed costs: 41,000 -- 31,000 op. profit: 29,000 -- 21,000 The flexible budget will report -- for fixed costs?
the variable costing income statement
The contribution-margin format is used for --.
the absorption costing income statement
The gross-margin format is used for --.
Revenues budget, production budget, direct manufacturing labor costs budget, and cost of goods sold
The order to follow when preparing the operating budget is ---
$117.00 Explanation: Absorption costing considers all variable manufacturing costs and all fixed manufacturing costs as inventoriable costs. Therefore, in this case, direct materials, direct manufacturing labor, variable manufacturing costs, and fixed manufacturing costs will be considered as inventoriable cost. The total inventoriable cost = ($42 + $7 + $4.00 + $64.00) = $117.00
Time Again LLC produces and sells a mantel clock for $100 per unit. In 2017, 41,000 clocks were produced and 37,000 were sold. Other information for the year includes: Direct materials $42 per unit Direct manufacturing labor $7 per unit Variable manufacturing costs $4.00 per unit Sales commissions $14.50 per part Fixed manufacturing costs $64.00 per unit Administrative expenses, all fixed $38.50 per unit What is the inventoriable cost per unit using absorption costing?
period cost
Variable costing regards fixed manufacturing overhead as a(n) --.
flexible budget amount is lower than actual costs incurred
When fixed overhead spending variance is unfavorable, it can be safely assumed that --.
actual rate per unit of cost-allocation base is higher than budgeted rate
When variable overhead spending variance is unfavorable, it can be safely assumed the --.
It is a system that traces direct costs to output produced by multiplying the standard prices or rates by the standard quantities of inputs allowed for the actual output produced
Which of the following best defines standard costing?
b) they are excluded from inventory cost and are treated as period costs
Which of the following best describes how fixed cost are treated in a variable cost method? a) they are part of the product cost b) they are excluded from inventory cost and are treated as period costs c) they are allocated to the product cost using a denominator-level capacity choice d) they are classified as non manufacturing costs
variable manufacturing costs
Which of the following costs is inventoried when using absorption costing?
b) sales commission paid on sale of product
Which of the following costs will be treated as period costs under absorption costing? a) raw materials used in the production b) sales commission paid on sale of product c) depreciation on factory equipment d) rent for factory building
Budgeted fixed overhead cost per unit of cost allocation base = Budgeted total costs in fixed overhead cost pool/Budgeted total quantity of cost allocation base
Which of the following is the mathematical expression for the budgeted fixed overhead cost per unit of cost allocation base?
c) it includes fixed manufacturing overhead as an inventoriable cost
Which of the following is true of absorption costing? a) it expenses marketing costs as COGS b) it treats direct manufacturing costs as period cost c) it includes fixed manufacturing overhead as an inventoriable cost d) it treats indirect manufacturing costs as a period cost
b) it treats direct manufacturing costs as period cost
Which of the following is true of variable costing? a) it expenses administration costs as COGS b) it treats direct manufacturing costs as period cost c) it includes fixed manufacturing overhead as an inventoriable cost d) it is required for external reporting to shareholders
Variable Overhead Control Accounts Payable & Various Other Accounts
Which of the following journal entries is used to record actual variable overhead costs incurred?
Budgeted input allowed per output unit x Budgeted variable overhead cost rate per input unit
Which of the following mathematical expressions is used to calculate budgeted variable overhead cost rate per output unit?
c) The difference between flexible budget costs and allocated overhead costs will give the production volume variance
Which of the following statements is true of fixed overhead cost variances? a) The difference between actual costs and flexible budget costs will give the production volume variance. b) The difference between actual costs and static budget costs will give the production volume variance. c) The difference between flexible budget costs and allocated overhead costs will give the production volume variance. d) The difference between static budget costs and flexible budget costs will give the production volume variance.
b) variable overhead costs have no production-volume variance
Which of the following statements is true of variable overhead costs? a) variable overhead costs always have unused capacity b) variable overhead costs have no production-volume variance c) variable overhead costs have no spending variance d) variable overhead costs have no efficiency variance
b) When production is greater than sales, operating income will be lower under variable costing than under absorption costing.
Which of the following statements is true? a) When production is equal to sales, operating income will be greater under variable costing than under absorption costing. b) When production is greater than sales, operating income will be lower under variable costing than under absorption costing. c) When production is less than sales, operating income is higher under absorption costing than variable costing. d) When production is greater than sales, operating income is greater under absorption costing than under variable costing.
$2,650 unfavorable [(9,500 - 9,000) x $5.30]
Zitrik Corporation manufactured 130,000 buckets during February. The variable overhead cost allocation base is $5.30 per machine hour. The following variable overhead data pertain to February: - Actual. - Budgeted Production: 130,000 units. 130,000 units Machine-hrs.: 9,500 hrs. 9,500 hrs. Var. over. cost per mach. hr.: $5.35. $5.30 What is the variable overhead efficiency variance?
Absorption costing
in --, fixed manufacturing costs are included as inventoriable costs.
the revenues budget
is the usual starting point for budgeting
the actual variable manufacturing overhead exceeded the flexible-budget amount by $5,000
A $5,000 unfavorable flexible-budget variance indicates that --.
$230 for variable costing and $360 under absorption costing Explanation: Variable Costing: $180 + $20 + $30 = $230 Absorption Costing: $180 + $20 + $30 + $130 = $360
AAA Manufacturing Inc, makes a product with the following costs per unit: Direct materials $180 Direct labor $20 Manufacturing overhead (variable) $30 Manufacturing overhead (fixed) $130 Marketing costs $75 What would be the inventoriable cost per unit under variable costing and what would it be under absorption costing?
b) Actual leasing costs for the machine were higher than expected
All of the following are possible causes of actual machine hours exceeding budgeted machine hours except? a) poor scheduling b) actual leasing costs for the machine were higher than expected c) machines were not maintained in good operating condition d) budgeted standards were set to tight
$27,600; $110,400; $27,600 Budgeted cost for direct materials= 9,200 units x $3 Budgeted cost for direct manufacturing labor= 9,200 x $12 Budgeted manufacturing overhead= 9,200 x $3
Bradford, Inc., expects to sell 9,000 ceramic vases for $21 each. Direct materials costs are $3, direct manufacturing labor is $12, and manufacturing overhead is $3 per vase. The following inventory levels apply to 2019: Direct materials: Beg=3,000; End=3,000 WIP Inventory: Beg=0; End=0 Finished Goods Inventory: Beg=300; End=500 What are the 2019 budgeted production costs for direct materials, direct manufacturing labor, and manufacturing overhead, respectively?
$123,000 Explanation: Fixed overhead cost per machine hour = $117,000/5,850 = $20 Machine hours per unit = 5,850/39,000 = 0.15 Fixed overhead cost per unit = $20 x 0.15 = $3.00 Fixed overhead allocated = 41,000 x $3.00 = $123,000
Castleton Corporation manufactured 41,000 units during March. The following fixed overhead data relates to March: - Actual. - Static Budget Production: 41,000 units. 39,000 units Machine-hrs.: 6,020 hrs. 5,850 hrs. Fixed over. costs for March: $125,500 $117,000 What is the amount of fixed overhead allocated to production?
a) Material Price Variance= 22,000 x ($4.40 - $4.25) = $3,300 unfavorable b) Material Price Variance= 20,000 x ($4.40 - $4.25) = $3,000 unfavorable c) Measuring the price variance at the time of materials purchased is desirable in situations where the amount of materials purchased varies substantially from the amount used during the period. Failure to measure the price variance based on materials purchased could result in a substantial delay in determining that a price change occurred. Also, if the purchasing manager is to be held accountable for his/her purchasing activities, it is appropriate to have the materials price variances computed at the time of purchase so the manger can include the variances on his/her monthly report. This encourages the purchasing manager to be more responsible for the activities under his/her control. It provides a closer relationship between responsibility and authority and become a relevant performance measure.
Coffee Company maintains a very large direct materials inventory because of critical demands placed upon it for rush orders from large hospitals. Item A contains hard-to-get material Y. Currently, the standard cost of material Y is $4.25 per gram. During February, 22,000 grams were purchased for $4.40 per gram, while only 20,000 grams were used in production. There was no beginning inventory of material Y. a) determine the direct materials price variance, assuming that all materials costs are the responsibility of the materials purchasing manager. b) determine the direct materials price variance, assuming that all materials costs are the responsibility of the production manager. c) discuss the issues involved in determining the price variance at the point of purchase versus the point of consumption.
$63,450 unfavorable; [13,500 - (27,000 x 7,800/26,000)mh] x $11.75
Cold Products Corporation manufactured 27,000 ice chests during September. The variable overhead cost allocation base is $11.75 per machine hour. The following variable overhead data pertain to September: - Actual. - Budgeted Production: 27,000 units. 26,000 units Machine-hrs.: 13,500 hrs. 7,800 hrs. Var. over. cost per mach. hr.: $11.25 $11.75 What is the variable overhead efficiency variance?
1) Budg. var. over.: $25 x (25,000 x 0.75) machine-hours = $468,750 2) Spending var.: ($25-$23) x 19,050 = $38,100 favorable 3) Efficiency var.: [19,050 - (27,000 x 0.75)] x $25 = $30,000 favorable
Comfort Company manufactures pillows. The 2015 operating budget is based on production of 25,000 pillows with 0.75 machine-hour allowed per pillow. Budgeted variable overhead per hour was $25. Actual production for 2015 was 27,000 pillows using 19,050 machine-hours. Actual variable costs were $23 per machine-hour. Calculate the variable overhead spending and efficiency variances. 1) Budgeted Variable Overhead 2) Spending Variance 3) Efficiency Variance
$37.18 Explanation: Absorption costing considers all variable manufacturing costs and all fixed manufacturing costs as inventoriable costs. Therefore, in this case, direct materials, direct manufacturing labor, variable manufacturing costs, and fixed manufacturing costs will be considered as inventoriable cost. The total inventoriable cost is $37.18 ($23 + $6 + $1 + $7.18*) *$790,000/110,000 = $7.18 per unit
Fast Track Auto produces and sells an auto part for $85 per unit. In 2017, 110,000 parts were produced and 90,000 were sold. Other information for the year includes: Direct materials $23 per unit Direct manufacturing labor $6 per unit Variable manufacturing costs $1 per unit Sales commissions $6 per part Fixed manufacturing costs $790,000 per year Administrative expenses, all fixed $310,000 per year What is the inventoriable cost per unit using absorption costing?
29,500 cues; 28,000 units (budgeted sales) + 2,800 (Budgeted ending inventory) - 1,300 (beginning inventory)
First Class, Inc., excepts to sell 28,000 pool cues for $14 each. Direct materials costs are $3, direct manufacturing labor is $5, and manufacturing overhead is $0.82 per pool cue. The following inventory levels apply to 2019: Direct materials: Beg=26,000; End=26,000 WIP Inventory: Beg=0; End=0 Finished Goods Inventory: Beg=1,300; End=2,800 How many pool cues need to be produced in 2019?
have no efficiency variance
Fixed overhead costs --.
are inventoriable costs
Under absorption costing, fixed manufacturing costs --.