Question

Variances

	Original Budget	Actual	Flexible Budget
Units Produced (in units)	10,000	12,000	?
Materials used (kg)	400	700	?
Material cost ($)	8,000	See purchases	?
Direct Labour (hours)	35,000	46,102	?
Direct Labour ($)	385,000	507,080	?
Variable Overhead ($)	350,000	419,161	?
Fixed Overhead ($)	160,000	161,000	?

           

Other Information

Overhead is Allocated on Direct Labour Hours

During the year, 800 kg of materials were purchased for $5,000

Beginning Inventory: none

Ending Inventory:     100kg

Required:

Calculate the flexible budget amounts for all items.

Calculate the following variances

1. Material Rate
2. Material Efficiency
3. Labour Price
4. Labour Efficiency
5. Variable Overhaed Rate
6. Variable Overhead Efficiency
7. Fixed Overhead Rate
8. Fixed Overhead Production Volume
9. Assume that the Material, Labour and Variable Overhead variances are inter-related. What is the most likely single cause of these variances. Briefly explain your answer.

Answer 1

	Cost card
	Particulars	Standard cost for actual production	Particulars	Actual cost
	Quantity & hour	Rate($/lb & $/hr)	Amount	Quantity & hour	Rate($/lb & $/hr)	Amount
	Direct Material	480.00	20.00	$                  9,600	Material purchased	800.00	6.25	$                     5,000.00
			($8000/400kg)		Material used	700.00	6.25	$                     4,375.00
					Closing material	100.00		$                         625.00
	Direct labour	42000.00	11.00	$            4,62,000	Direct labour	46,102.00	16.50	$                5,07,080.00
			($385000/35000)
	Variable overhead	42000.00	10.00	$            4,20,000	Variable overhead	35,300.00	11.87	$                4,19,161.00
			($350000/35000)
	Fixed overhead			$            1,60,000	Fixed overhead			$                1,61,000.00
	Total Standard manufacturing cost	$         10,51,600
		Budgeted unit		10,000
		Actual unit		12,000
	Computation of variances:
1	Material Price variance = (Standard rate - Actual rate) * Actual quantity purchase
	Material Price variance = ($20 - $6.25) X 800 pound   = $11000 (Favourable)
2	Material efficiency variance = (Standard Quantity - Actual Quantity used) * Standard rate
	Material efficiency variance = (480 pound   - 700 pound ) X $20 = $-4400 (Unfavourable)
3	Labor Rate variance = (Standard rate - Actual rate) * Actual hours
	Labor Rate variance = ($11/hr - $16.5/hr) X 46102 hr = $-253561 (Unfavourable)
4	Labor efficiency variance = (Standard Hours - Actual Hours) * Standard rate
	Labor efficiency variance = (42000 hr - 46102 hr) X $11/hr = $-45122 (Unfavourable)
5	Variable Overhead rate variance = (Standard rate - Actual rate) * Actual hour used
	Variable Overhead rate variance = ($12/hr - $12.04/hr) X 35300 hr = $-1400 (Unfavourable)
6	Variable overhead efficiency variance = (Standard hour - Actual hour) * Standard rate
	Variable overhead efficiency variance = (42000 hr - 35300 hr) X $10/hr = $67000 (Favourable)
7	Fixed Overhead Budget variance = (Actual Fixed overhead - Budgeted Fixed overhead
	Fixed Overhead Budget variance = ($161000 - $160000) = $-1000 (Unfavourable)
8	Fixed overhead Volume variance = (Actual output - Budgeted output) * Budgeted Overhead rate
	Fixed overhead Volume variance = (12000 unit - 10000 unit ) X ($160000 / 10000 unit ) = $32000 (Favourable)	ekkarill92 Next > < Previous Related Solutions Original Budget Actual Flexible Budget Units Produced (in units) 10,000 12,000 ? Materials used (kg) 400... Original Budget Actual Flexible Budget Units Produced (in units) 10,000 12,000 ? Materials used (kg) 400 700 ? Material cost ($) 8,000 See purchases ? Direct Labour (hours) 35,000 46,102 ? Direct Labour ($) 385,000 507,080 ? Variable Overhead ($) 350,000 419,161 ? Fixed Overhead ($) 160,000 161,000 ?             Other Information Overhead is Allocated on Direct Labour Hours During the year, 800 kg of materials were purchased for $5,000 Beginning Inventory: none Ending Inventory:     100kg Required: Calculate the flexible... Original Budget Actual Flexible Budget Units Produced (in units) 10,000 12,000 ? Materials used (kg) 400... Original Budget Actual Flexible Budget Units Produced (in units) 10,000 12,000 ? Materials used (kg) 400 700 ? Material cost ($) 8,000 See purchases ? Direct Labour (hours) 35,000 46,102 ? Direct Labour ($) 385,000 507,080 ? Variable Overhead ($) 350,000 419,161 ? Fixed Overhead ($) 160,000 161,000 ?             Other Information Overhead is Allocated on Direct Labour Hours During the year, 800 kg of materials were purchased for $5,000 Beginning Inventory: none Ending Inventory:     100kg Required: Calculate the flexible... Original Budget Actual Flexible Budget Units Produced (in units) 10,000 12,000 Materials used (kg) 400 700... Original Budget Actual Flexible Budget Units Produced (in units) 10,000 12,000 Materials used (kg) 400 700 Material cost ($) 8,000 See purchases Direct Labour (hours) 35,000 46,102 Direct Labour ($) 385,000 507,080 Variable Overhead ($) 350,000 419,161 Fixed Overhead ($) 160,000 161,000             Other Information Overhead is Allocated on Direct Labour Hours During the year, 800 kg of materials were purchased for $5,000 Beginning Inventory: none Ending Inventory:     100kg Required: Calculate the flexible budget amounts for all items. Calculate the... Original Budget Actual Flexible Budget Units Produced (in units) 10,000 12,000 Materials used (kg) 400 700... Original Budget Actual Flexible Budget Units Produced (in units) 10,000 12,000 Materials used (kg) 400 700 Material cost ($) 8,000 See purchases Direct Labour (hours) 35,000 46,102 Direct Labour ($) 385,000 507,080 Variable Overhead ($) 350,000 419,161 Fixed Overhead ($) 160,000 161,000             Other Information Overhead is Allocated on Direct Labour Hours During the year, 800 kg of materials were purchased for $5,000 Beginning Inventory: none Ending Inventory:     100kg Required: Calculate the flexible budget amounts for all items. Calculate the... Answer must be typed in word or in excel Original Budget Actual Units produced 1,000 units... Answer must be typed in word or in excel Original Budget Actual Units produced 1,000 units 970 units Materials (kg) 400 kg 409 kg Material Costs $8,000 See other info Direct Labour (Hours)              36,000 hours 34,010 hours Direct Labour Costs $385,000 $365,750 Variable Overhead Costs $255,000 $245,000 Fixed Overhead Costs    $160,000 $165,000 Other Information Overhead is Allocated on Direct Labour Hours During the year, 500 kg of materials were purchased for $9,000 Beginning Inventory: none Ending Inventory:     91kg Required: Calculate... Performance Report Year Ended December 31, 2017 Actual Flexible-Budget Flexible Sales-Volume Static Results Variances Budget Variances... Performance Report Year Ended December 31, 2017 Actual Flexible-Budget Flexible Sales-Volume Static Results Variances Budget Variances Budget Units sold 108,000 99,000 Revenues (sales) $702,000 $420,750 Variable costs 430,000 237,600 Contribution margin 272,000 183,150 Fixed costs 193,850 105,000 Operating income $78,150 $78,150 The Beekman Company produces engine parts for car manufacturers. A new accountant intern at Beekman has accidentally deleted the calculations on the​ company's variance analysis calculations for the year ended December​ 31, 2017. Requirement 1. Calculate all the required... Actual Results Revenue & Spending Variances Flexible-budget Activity Variances Planning (Static) Budget TotalVariance Shoes sold (q)... Actual Results Revenue & Spending Variances Flexible-budget Activity Variances Planning (Static) Budget TotalVariance Shoes sold (q) $19,000 20,000 Revenue  ($4.00q) $79,000 $80,000 Expenses: COGS ($1.50q) $31,000 $30,000    Wages and salaries ($8,000 + $.50q) $16,000 $18,000    Supplies ($.25q) $4,600 $5,000    Insurance ($2,000) $2,100 $2,000 Miscellaneous costs ($.30q) $5,400 $6,000 Total expenses $59,100 $61,000 Net operating income $19,900 $19,000 Completely fill in table above. Explain revenue variances and spending variances in flexible budget planning? Explain revenue variances and spending variances in flexible budget planning? Compute the​ price, quantity, and​ flexible-budget variances for direct materials and direct labor. Use U or... Compute the​ price, quantity, and​ flexible-budget variances for direct materials and direct labor. Use U or F to indicate whether the variances are unfavorable or favorable. 1. Begin by completing the variance analysis below for direct materials. Be sure to label each variance as favorable or unfavorable. ​(Enter all amounts as positive numbers. Round your answers to the nearest whole​ dollar.) 2. Prepare a plausible explanation for the performance. Direct Materials Direct Labor Actual price per unit of input (lb... A. Complete a flexible budget for 20,000 units produced. Use the following information at a production... A. Complete a flexible budget for 20,000 units produced. Use the following information at a production level of 15,000 units to complete the flexible budget: Budgeted units 15,000 Revenue $1,500,000 Expenses: Wages and Salaries ($200,000 + $10Q) $350,000 Utilities (variable) $300,000 Depreciation (fixed) $200,000 Total expenses $850,000 Net operating income $650,000 Q = units produced Budgeted units 20,000 Revenue Expenses: Wages and Salaries ($200,000 + $10Q) Utilities (variable) Depreciation (fixed) Total expenses Net operating income B. Calculate the activity variances... ADVERTISEMENT Subjects Accounting Advanced Math Anatomy and Physiology Biology Chemistry Civil Engineering Computer Science Economics Electrical Engineering Finance History Math Mechanical Engineering Operations Management Physics Psychology Statistics and Probability Nursing Other ADVERTISEMENT Latest Questions A falling-head permeameter containing a silty clay loam soil sample has a sample diameter of 10... 2) Two types of customers make up the market for Armoyas. There are 100 type A... Suppose that the annual market demand for Bleebs is given by Q=3750-75P The average and marginal... 1-If two countries choose to fix the exchange rates among their currencies, then Select one: A.... Suppose you have $250,000 of loan. The terms of the loan are that the yearly interest... Describe where Broca’s area and Wernicke’s areas are located in the brain. Compare and contrast the... Switzerland, a country with a special status outside the EU, banned the imports of agricultural products... ADVERTISEMENT About @ 2020 WizEdu