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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).

 Budget Actual 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.