Homework Answers
No, the president's pleasure is not justified as the actual output is 9400 units and the static output is 10800 units ($486000/45) and the company is comparing the actual output with the static output by which the result in variances is favorable.
| Actual Results | Flexible Budget Variance | Flexible Budget | Static Budget Variance | Static Budget | |||
| Output | 9400 | 9400 | 1400 | U | 10800 | ||
| Direct materials | $448500 | (448500-423000)= 25500 | U | (9400*$45)= $423000 | (423000-486000)= 63000 | F | $486000 |
| Direct manufacturing labor | 83400 | (83400-75200)= 8200 | U | (9400*$8)= 75200 | (75200-86400)= 11200 | F | 86400 |
| Direct marketing labor | 140200 | (140200-131600)= 8600 | U | (9400*$14)= 131600 | (131600-151200)= 19600 | F | 151200 |
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Prepare a flexible budget for the items shown and compute the
flexible budget cost variances and planning cost variances for each
item. Indicate whether the variances are favorable or unfavorable
for each item.
Begin with the master budget, then complete the flexible budget
columns and the actual results columns. Label each variance as
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Direct materials
2 lbs. at $6 per lb.
$12.00
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126.00
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Variable
$7 per DLH
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Fixed
$9 per DLH
63.00
Standard manufacturing cost per output unit
$250.00
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denominator level. The records for January indicated the
following:
Direct materials...
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Tully Company's production performance report for
April includes the information shown below.
LOADING...
Requirement
Prepare a flexible budget for the items shown and compute the
flexible budget cost variances and planning cost variances for each
item. Indicate whether the variances are favorable or unfavorable
for each item.
Begin with the master budget, then complete the flexible budget
columns and the actual results columns. Label each variance as
favorable (F) or unfavorable (U). (For variances with a $0
balance, make sure...
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Input
Cost per Output Unit
Direct materials
2 lbs. at $6 per lb.
$12.00
Direct manufacturing labor
7 hrs. at $18 per hr.
126.00
Manufacturing overhead:
Variable
$7 per DLH
49.00
Fixed
$9 per DLH
63.00
Standard manufacturing cost per output unit
$250.00
The denominator level for total manufacturing overhead per month
in 2014 is 38,000 direct manufacturing labor-hours.
Barrett's flexible budget for January 2014 was based on this
denominator level. The records for January indicated the
following:
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