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.