Question

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In September, Larson Inc. sold 40,000 units of its only product for $240,000 and incurred a total cost of $225,000, of which $25,000 is fixed costs. The flexible budget for September showed total sales of $300,000. Among variances of the period were: total variable cost flexible-budget variance, $8,000U; total flexible-budget variance, $63,000U and, sales volume variance, in terms of contribution margin, $27,00oU. The total number of budgeted units reflected in the master budget for September was O 36,000 units. O 40,000 units O45,000 units O48,000 units. O50,000 units Barstow Manufacturing Company has two service departments-product design and engineering support, and two The distribution ion of each service department's efforts to the other departments is shown below FROM то Design Support Assembly Finishing Design 0% 10% Support 20% 30% 45% 60% 35% 0% The direct operating costs of the departments (including both variable and fixed costs) were as foll Design Engineering Support Assembly Finishing $140,000 $160,000 $550,000 $B40,000 The total cost accumulated in the assembly department using the step method is (calculate all ratios and percentages to 4 decimal places, for esamoie a s and rouod a dollar amounts to the nearest whole dollar; assume that the design department goes first $1,000,125 $1,890,000 o $689,875. $642,000. $923,000

Answer 1

Ans-1-

	Actual			Flexible budget			Master
Units	40000			40000			50000	Units
Sales	240000	60000	U	300000	75000	U	375000
Variable cost	200000	8000	U	192000	48000	F	240000
Contribution margin	40000	68000	U	108000	27000	U	135000
Fixed cost	25000	5000	F	30000	0		30000
Net income	15000	63000	U	78000	27000	U	105000

So total sales revenue = 135000*300000/108000 = 375000

Sales price per unit = 300000/40000= 7.5

As per master budget sales units = 375000/7.5 = 50000 units

Hence, The correct option is E.-50,000 units

2-

	Design	Support	Assembly	Finishing
Design	0%	10%	30%	60%
Support	20%	0%	45%	35%

	Direct Cost	Design	Support	Assembly	Finishing
Base Cost		140,000	160,000	550,000	840,000
Design	140,000		14,000 (140,000*10%)	42,000 (140,000*30%)	84,000 (140,000*60%)
Engineering support	174,000 (160,000+14,000)			97,875 (174,000*45%/ (45%+35%)	76,125 (174,000*35%/ (45%+35%)
				689,875

Total cost accumulated to assembly department is $689,875

Hence, the correct option is C-689,875