Question
In: Accounting
Problem 9-18 (Algo) Activity and Spending Variances [LO9-1, LO9-2, LO9-3] You have just been hired by...
Problem 9-18 (Algo) Activity and Spending Variances [LO9-1, LO9-2, LO9-3]
You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company’s costing system and “do what you can to help us get better control of our manufacturing overhead costs.” You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control.
After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March:
| Cost Formula | Actual Cost in March | ||
| Utilities | $16,300 + $0.11 per machine-hour | $ | 20,740 |
| Maintenance | $38,400 + $1.20 per machine-hour | $ | 61,000 |
| Supplies | $0.40 per machine-hour | $ | 9,400 |
| Indirect labor | $94,100 + $1.70 per machine-hour | $ | 135,800 |
| Depreciation | $68,300 | $ | 70,000 |
During March, the company worked 22,000 machine-hours and produced 16,000 units. The company had originally planned to work 24,000 machine-hours during March.
Required:
1. Calculate the activity variances for March.
Calculate the activity variances for March. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
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2. Calculate the spending variances for March.
Calculate the spending variances for March. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
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Solutions
Expert Solution
1. Calculate the activity variances for March.
Calculate the activity variances for March. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
|
|||||||||||||||||||||||||||
2. Calculate the spending variances for March.
Calculate the spending variances for March. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
|
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ekkarill92 answered 1 year agoRelated Solutions
Problem 9-20 Activity and Spending Variances [LO9-1, LO9-2, LO9-3] You have just been hired by FAB...
Problem 9-20 Activity and Spending Variances [LO9-1, LO9-2,
LO9-3]
You have just been hired by FAB Corporation, the manufacturer of
a revolutionary new garage door opening device. The president has
asked that you review the company’s costing system and “do what you
can to help us get better control of our manufacturing overhead
costs.” You find that the company has never used a flexible budget,
and you suggest that preparing such a budget would be an excellent
first step in...
Problem 9-20 Activity and Spending Variances [LO9-1, LO9-2, LO9-3] You have just been hired by FAB...
Problem 9-20 Activity and Spending Variances [LO9-1, LO9-2,
LO9-3]
You have just been hired by FAB Corporation, the manufacturer of
a revolutionary new garage door opening device. The president has
asked that you review the company’s costing system and “do what you
can to help us get better control of our manufacturing overhead
costs.” You find that the company has never used a flexible budget,
and you suggest that preparing such a budget would be an excellent
first step in...
Problem 9-20 Activity and Spending Variances [LO9-1, LO9-2, LO9-3] You have just been hired by FAB...
Problem 9-20 Activity and Spending Variances [LO9-1, LO9-2,
LO9-3]
You have just been hired by FAB Corporation, the manufacturer of
a revolutionary new garage door opening device. The president has
asked that you review the company’s costing system and “do what you
can to help us get better control of our manufacturing overhead
costs.” You find that the company has never used a flexible budget,
and you suggest that preparing such a budget would be an excellent
first step in...
Problem 9-20 (Algo) Critique a Report; Prepare a Performance Report [LO9-1, LO9-2, LO9-3, LO9-4] TipTop Flight...
Problem 9-20 (Algo) Critique a Report; Prepare a Performance
Report [LO9-1, LO9-2, LO9-3, LO9-4]
TipTop Flight School offers flying lessons at a small municipal
airport. The school’s owner and manager has been attempting to
evaluate performance and control costs using a variance report that
compares the planning budget to actual results. A recent variance
report appears below:
TipTop Flight School
Variance Report
For the Month Ended July 31
Actual
Results
Planning
Budget
Variances
Lessons
145
140
Revenue
$
33,110
$...
Exercise 9-16 Flexible Budgets and Revenue and Spending Variances [LO9-1, LO9-3] Via Gelato is a popular...
Exercise 9-16 Flexible Budgets and Revenue and Spending
Variances [LO9-1, LO9-3]
Via Gelato is a popular neighborhood gelato shop. The company
has provided the following cost formulas and actual results for the
month of June:
Fixed Element
per Month
Variable Element
per Liter
Actual Total
for June
Revenue
$
12.00
$
71,540
Raw materials
$
4.65
$
29,230
Wages
$
5,600
$
1.40
$
13,860
Utilities
$
1,630
$
0.20
$
3,270
Rent
$
2,600
$
2,600
Insurance
$
1,350...
Exercise 9-9 Prepare a Report Showing Revenue and Spending Variances [LO9-2] Lavage Rapide is a Canadian...
Exercise 9-9 Prepare a Report Showing Revenue and Spending
Variances [LO9-2]
Lavage Rapide is a Canadian company that owns and operates a
large automatic car wash facility near Montreal. The following
table provides data concerning the company’s costs:
Fixed Cost
per Month
Cost per
Car Washed
Cleaning supplies
$
0.80
Electricity
$
1,200
$
0.15
Maintenance
$
0.20
Wages and salaries
$
5,000
$
0.30
Depreciation
$
6,000
Rent
$
8,000
Administrative expenses
$
4,000
$
0.10
For example, electricity...
Exercise 9-13 Revenue and Spending Variances [LO9-3] Lavage Rapide is a Canadian company that owns and...
Exercise 9-13 Revenue and Spending Variances [LO9-3]
Lavage Rapide is a Canadian company that owns and operates a
large automatic car wash facility near Montreal. The following
table provides data concerning the company’s costs:
Fixed Cost
per Month
Cost per
Car Washed
Cleaning supplies
$
0.60
Electricity
$
1,100
$
0.07
Maintenance
$
0.20
Wages and salaries
$
4,400
$
0.40
Depreciation
$
8,200
Rent
$
2,000
Administrative expenses
$
1,700
$
0.05
For example, electricity costs are $1,100 per...
Exercise 9-13 Revenue and Spending Variances [LO9-3] Lavage Rapide is a Canadian company that owns and...
Exercise 9-13 Revenue and Spending Variances [LO9-3]
Lavage Rapide is a Canadian company that owns and operates a
large automatic car wash facility near Montreal. The following
table provides data concerning the company’s costs:
Fixed Cost
per Month
Cost per
Car Washed
Cleaning supplies
$
0.50
Electricity
$
1,000
$
0.09
Maintenance
$
0.25
Wages and salaries
$
4,300
$
0.20
Depreciation
$
8,500
Rent
$
1,900
Administrative expenses
$
1,600
$
0.03
For example, electricity costs are $1,000 per...
Exercise 9-2 Prepare a Report Showing Revenue and Spending Variances [LO9-2] Quilcene Oysteria farms and sells...
Exercise 9-2 Prepare a Report Showing Revenue and Spending
Variances [LO9-2]
Quilcene Oysteria farms and sells oysters in the Pacific
Northwest. The company harvested and sold 7,900 pounds of oysters
in August. The company’s flexible budget for August appears
below:
Quilcene Oysteria
Flexible Budget
For the Month Ended August 31
Actual pounds (q)
7,900
Revenue ($4.10q)
$
32,390
Expenses:
Packing supplies ($0.30q)
2,370
Oyster bed maintenance ($3,300)
3,300
Wages and salaries ($2,000 + $0.30q)
4,370
Shipping ($0.60q)
4,740
Utilities ($1,220)...
Problem 9-25 Critiquing a Variance Report; Preparing a Performance Report [LO9-1, LO9-2, LO9-3, LO9-4, LO9-6] Several...
Problem 9-25 Critiquing a Variance Report; Preparing a
Performance Report [LO9-1, LO9-2, LO9-3, LO9-4, LO9-6] Several
years ago, Westmont Corporation developed a comprehensive budgeting
system for planning and control purposes. While departmental
supervisors have been happy with the system, the factory manager
has expressed considerable dissatisfaction with the information
being generated by the system. A report for the company's Assembly
Department for the month of March follows: Assembly Department Cost
Report For the Month Ended March 31 Actual Results Planning...
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