
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.
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.
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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