In: Accounting
1) US-based Rogers Rods & Reels Ltd. manufactures and sells various types of fishing equipment. At the end of 2008, Rogers had estimated for the production and sale of 15 000 bass fishing rods.
Each rod has a standard calling for 1.5 pounds of direct material at a standard cost of $8.00 per pound and 15 minutes of direct labour time at a standard cost of $.18 per minute.
During 2009, Rogers actually produced and sold 16 000 rods. These 16 000 rods had an actual direct materials cost of $179 200 (25 600 pounds at $7.00 per pound) and an actual direct labour cost of $44 800 (224 000 minutes at $.20 per minute).
Each rod sells for $50.
What is Rogers’ flexible budget variance?
a. |
$ 3500 U |
|
b. |
$ 3500 F |
|
c. |
$11 200 U |
|
d. |
$11 200 F |
2) Ligon Enterprises has prepared a production budget for October. Management has determined that the total required production for October is 575 000 units when an ending inventory of 70 000 units is desired and the beginning inventory is 15 000 units.
Based on the above information, what were October’s budgeted sales?
a. |
505 000 units |
|
b. |
590 000 units |
|
c. |
453 000 units |
|
d. |
520 000 units |
1 | Flexible Budget |
Actual | Variance | |||||
Actual units produced | 16000 | 16000 | ||||||
Direct material | 192000 | 179200 | ||||||
(16000*1.5*8) | ||||||||
Direct labor | 43200 | 44800 | ||||||
(16000*15*0.18) | ||||||||
Total cost | 235200 | 224000 | 11200 | F | ||||
Flexible budget variance=11200 F | ||||||||
Answer is d.11200 F | ||||||||
2 | Required production=Budgeted sales+Ending inventory-Beginning inventory | |||||||
575000=Budgted sales+70000-15000 | ||||||||
Budgeted sales=575000-55000=520000 units | ||||||||
Answer is d.520000 units | ||||||||