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ACC202 Week 4 Exercises 15-1 15-2 15-4 15-5

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E15-1 Indicate whether each of the following variances is favorable or unfavorable. The first one has been done as an example.


Labor cost $10.00 per hour $9.60 per hour 
Labor usage 61,000 hours 61,800 hours 
Fixed cost spending $400,000$390,000
Fixed cost per unit (volume) $3.20 per unit $3.16 per unit 
Sales volume 40,000 units 42,000 units 
Sales price $3.60 per unit $3.63 per unit 
Materials cost $2.90 per pound $3.00 per pound 
Materials usage 91,000 pounds 90,000 pounds 

E15-2 Compute variances for the following items and indicate whether each variance is favorable (F) or unfavorable (U).

Required
Compute variances for the following items and indicate whether each variance is favorable (F) or
unfavorable (U).

BudgetActual
Sales price  650 525
Sales revenue  580,000 600,000
Cost of goods sold  385,000 360,000
Material purchases at 5,000 pounds  275,000 280,000
Materials usage  180,000 178,000
Production volume  950 900
Wages at 4,000 hours  60,000 58,700
Labor usage at $16 per hour  96,000 97,000
Research and development expense  22,000 25,000
Selling and administrative expenses  49,000 40,000

Exercise 15-4 Determining sales and variable cost volume variances

Required
Use the information provided in Exercise 15-3.
a. Determine the sales and variable cost volume variances.
b. Classify the variances as favorable (F) or unfavorable (U).
c. Comment on the usefulness of the variances with respect to performance evaluation and identify
the member of the management team most likely to be responsible for these variances.
d. Determine the amount of fixed cost that will appear in the flexible budget.

Info from E15-3
Sales price $8.00 per unit 
Variable manufacturing cost 4.00 per unit 
Fixed manufacturing costs 3,000 total 
Fixed selling and administrative costs 1,000 total 

Sexton planned to produce and sell 2,000 units. Actual production and sales amounted to 2,200 units.

E15-5 Use the standard price and cost data provided in Exercise 15-3. Assume that the actual sales
price is $7.65 per unit and that the actual variable cost is $4.25 per unit. The actual fixed
manufacturing cost is $2,850, and the actual selling and administrative expenses are $1,025.

Required
a. Determine the flexible budget variances.
b. Classify the variances as favorable (F) or unfavorable (U).
c. Provide another name for the fixed cost flexible budget variance.
d. Comment on the usefulness of the variances with respect to performance evaluation and
identify the member(s) of the management team who is (are) most likely to be responsible
for these variances.

Info from E15-3
Sales price $8.00 per unit 
Variable manufacturing cost 4.00 per unit 
Fixed manufacturing costs 3,000 total 
Fixed selling and administrative costs 1,000 total 

Sexton planned to produce and sell 2,000 units. Actual production and sales amounted to 2,200 units.

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