#7
Factory Overhead Cost Variance Report
Tannin Products Inc. prepared the following factory overhead cost budget for the Trim Department for July of the current year, during which it expected to use 16,000 hours for production:
| Variable overhead costs: | ||
| Indirect factory labor | $48,000 | |
| Power and light | 11,520 | |
| Indirect materials | 24,000 | |
| Total variable overhead cost | $ 83,520 | |
| Fixed overhead costs: | ||
| Supervisory salaries | $59,280 | |
| Depreciation of plant and equipment | 15,600 | |
| Insurance and property taxes | 29,120 | |
| Total fixed overhead cost | 104,000 | |
| Total factory overhead cost | $187,520 |
Tannin has available 20,000 hours of monthly productive capacity in the Trim Department under normal business conditions. During July, the Trim Department actually used 15,000 hours for production. The actual fixed costs were as budgeted. The actual variable overhead for July was as follows:
| Actual variable factory overhead costs: | |
| Indirect factory labor | $43,880 |
| Power and light | 10,610 |
| Indirect materials | 23,600 |
| Total variable cost | $78,090 |
Construct a factory overhead cost variance report for the Trim Department for July. Enter all amounts as positive numbers. If an amount box does not require an entry, leave it blank. Round your interim computations to the nearest cent, if required.
| Tannin Products Inc. | ||||
| Factory Overhead Cost Variance Report-Trim Department | ||||
| For the Month Ended July 31 | ||||
| Productive capacity for the month 20,000 hrs. | ||||
| Actual productive capacity used for the month 15,000 hrs. | ||||
| Budget (at actual production) | Actual | Favorable Variances | Unfavorable Variances | |
| Variable factory overhead costs: | ||||
| Indirect factory labor | $ | $ | $ | |
| Power and light | ||||
| Indirect materials | $ | |||
| Total variable factory overhead cost | $ | $ | ||
| Fixed factory overhead costs: | ||||
| Supervisory salaries | $ | $ | ||
| Depreciation of plant and equipment | ||||
| Insurance and property taxes | ||||
| Total fixed factory overhead cost | $ | $ | ||
| Total factory overhead cost | $ | $ | ||
| Total controllable variances | $ | $ | ||
| Net controllable variance-favorable | $ | |||
| Volume variance-unfavorable | ||||
| Idle hours at the standard rate for fixed factory overhead | ||||
| Total factory overhead cost variance-unfavorable | $ | |||
In: Accounting
Exercise 20-17
Siren Company builds custom fishing lures for sporting goods
stores. In its first year of operations, 2017, the company incurred
the following costs.
Variable Costs per Unit
Direct materials $7.80
Direct labor $3.59
Variable manufacturing overhead $6.03
Variable selling and administrative expenses $4.06
Fixed Costs per Year
Fixed manufacturing overhead $231,400
Fixed selling and administrative expenses $218,504
Siren Company sells the fishing lures for $26.00. During 2017, the
company sold 79,000 lures and produced 89,000 lures.
Assuming the company uses variable costing, calculate Siren’s
manufacturing cost per unit for 2017. (Round answer to 2 decimal
places, e.g.10.50.)
Manufacturing cost per unit
$
LINK TO TEXT
Prepare a variable costing income statement for 2017. (Enter
negative amounts using either a negative sign preceding the number
e.g. -45 or parentheses e.g. (45).)
SIREN COMPANY
Income Statement
December 31, 2017
For the Quarter Ended December 31, 2017
For the Year Ended December 31, 2017
Variable Costing
Administrative Expenses
Contribution Margin
Fixed Manufacturing Overhead
Fixed Selling and Administrative Expenses
Gross Profit
Net Income/(Loss)
Sales
Total Fixed Expenses
Total Variable Expenses
Variable Cost of Goods Sold
Variable Selling and Administrative Expenses
$
Administrative Expenses
Contribution Margin
Fixed Manufacturing Overhead
Fixed Selling and Administrative Expenses
Gross Profit
Net Income/(Loss)
Sales
Total Fixed Expenses
Total Variable Expenses
Variable Cost of Goods Sold
Variable Selling and Administrative Expenses
$
Administrative Expenses
Contribution Margin
Fixed Manufacturing Overhead
Fixed Selling and Administrative Expenses
Gross Profit
Net Income/(Loss)
Sales
Total Fixed Expenses
Total Variable Expenses
Variable Cost of Goods Sold
Variable Selling and Administrative Expenses
Administrative Expenses
Contribution Margin
Fixed Manufacturing Overhead
Fixed Selling and Administrative Expenses
Gross Profit
Net Income/(Loss)
Sales
Total Fixed Expenses
Total Variable Expenses
Variable Cost of Goods Sold
Variable Selling and Administrative Expenses
Administrative Expenses
Contribution Margin
Fixed Manufacturing Overhead
Fixed Selling and Administrative Expenses
Gross Profit
Net Income/(Loss)
Sales
Total Fixed Expenses
Total Variable Expenses
Variable Cost of Goods Sold
Variable Selling and Administrative Expenses
Administrative Expenses
Contribution Margin
Fixed Manufacturing Overhead
Fixed Selling and Administrative Expenses
Gross Profit
Net Income/(Loss)
Sales
Total Fixed Expenses
Total Variable Expenses
Variable Cost of Goods Sold
Variable Selling and Administrative Expenses
Administrative Expenses
Contribution Margin
Fixed Manufacturing Overhead
Fixed Selling and Administrative Expenses
Gross Profit
Net Income/(Loss)
Sales
Total Fixed Expenses
Total Variable Expenses
Variable Cost of Goods Sold
Variable Selling and Administrative Expenses
$
LINK TO TEXT
Assuming the company uses absorption costing, calculate Siren’s
manufacturing cost per unit for 2017. (Round answer to 2 decimal
places, e.g.10.50.)
Manufacturing cost per unit
$
LINK TO TEXT
Prepare an absorption costing income statement for 2017. (Enter
negative amounts using either a negative sign preceding the number
e.g. -45 or parentheses e.g. (45).)
SIREN COMPANY
Income Statement
December 31, 2017
For the Quarter Ended December 31, 2017
For the Year Ended December 31, 2017
Absorption Costing
Administrative Expenses
Contribution Margin
Cost of Goods Sold
Fixed Manufacturing Overhead
Fixed Selling and Administrative Expenses
Gross Profit
Net Income/(Loss)
Sales
Total Fixed Expenses
Total Variable Expenses
Variable Cost of Goods Sold
Variable Selling and Administrative Expenses
$
Administrative Expenses
Contribution Margin
Cost of Goods Sold
Fixed Manufacturing Overhead
Fixed Selling and Administrative Expenses
Gross Profit
Net Income/(Loss)
Sales
Total Fixed Expenses
Total Variable Expenses
Variable Cost of Goods Sold
Variable Selling and Administrative Expenses
Administrative Expenses
Contribution Margin
Cost of Goods Sold
Fixed Manufacturing Overhead
Fixed Selling and Administrative Expenses
Gross Profit
Net Income/(Loss)
Sales
Total Fixed Expenses
Total Variable Expenses
Variable Cost of Goods Sold
Variable Selling and Administrative Expenses
Administrative Expenses
Contribution Margin
Cost of Goods Sold
Fixed Manufacturing Overhead
Fixed Selling and Administrative Expenses
Gross Profit
Net Income/(Loss)
Sales
Total Fixed Expenses
Total Variable Expenses
Variable Cost of Goods Sold
Variable Selling and Administrative Expenses
$
Administrative Expenses
Contribution Margin
Cost of Goods Sold
Fixed Manufacturing Overhead
Fixed Selling and Administrative Expenses
Gross Profit
Net Income/(Loss)
Sales
Total Fixed Expenses
Total Variable Expenses
Variable Cost of Goods Sold
Variable Selling and Administrative Expenses
Administrative Expenses
Contribution Margin
Cost of Goods Sold
Fixed Manufacturing Overhead
Fixed Selling and Administrative Expenses
Gross Profit
Net Income/(Loss)
Sales
Total Fixed Expenses
Total Variable Expenses
Variable Cost of Goods Sold
Variable Selling and Administrative Expenses
$
LINK TO TEXT
Question Attempts: Unlimited
SAVE FOR LATER
SUBMIT ANSWER
In: Accounting
An important application of regression analysis in accounting is in the estimation of cost. By collecting data on volume and cost and using the least squares method to develop an estimated regression equation relating volume and cost, an accountant can estimate the cost associated with a particular manufacturing volume. Consider the following sample of production volumes and total cost data for a manufacturing operation.
| Production Volume (units) | Total Cost ($) |
| 400 | 4,700 |
| 450 | 5,700 |
| 550 | 6,100 |
| 600 | 6,600 |
| 700 | 7,100 |
| 750 | 7,700 |
In: Statistics and Probability
An important application of regression analysis in accounting is in the estimation of cost. By collecting data on volume and cost and using the least squares method to develop an estimated regression equation relating volume and cost, an accountant can estimate the cost associated with a particular manufacturing volume. Consider the following sample of production volumes and total cost data for a manufacturing operation.
| Production Volume (units) | Total Cost ($) |
| 400 | 4,500 |
| 450 | 5,500 |
| 550 | 5,900 |
| 600 | 6,400 |
| 700 | 6,900 |
| 750 | 7,500 |
In: Statistics and Probability
Selzik Company makes super-premium cake mixes that go through two processing departments—Blending and Packaging. The following activity was recorded in the Blending Department during July:
| Production data: | |||
| Units in process, July 1 (materials 100% complete; conversion 30% complete) | 10,000 | ||
| Units started into production | 170,000 | ||
| Units in process, July 31 (materials 100% complete; conversion 40% complete) | 20,000 | ||
| Cost data: | |||
| Work in process inventory, July 1: | |||
| Materials cost | $ | 8,500 | |
| Conversion cost | $ | 4,900 | |
| Cost added during the month: | |||
| Materials cost | $ | 139,400 | |
| Conversion cost | $ | 244,200 | |
All materials are added at the beginning of work in the Blending Department. The company uses the FIFO method in its process costing system.
Required:
1. Calculate the Blending Department's equivalent units of production for materials and conversion for July.
2. Calculate the Blending Department's cost per equivalent unit for materials and conversion for July.
3. Calculate the Blending Department's cost of ending work in process inventory for materials, conversion, and in total for July.
4. Calculate the Blending Department's cost of units transferred out to the next department for materials, conversion, and in total for July.
5. Prepare a cost reconciliation report for the Blending Department for July.
Calculate the Blending Department's equivalent units of production for materials and conversion for July.
| Required 1 |
|
| Required 2 | ||||||||
|
Calculate the Blending Department's cost of ending work in process inventory for materials, conversion, and in total for July. (Round your intermediate calculations to 2 decimal places.)
|
|
Prepare a cost reconciliation report for the Blending Department for July. (Round your intermediate calculations to 2 decimal places.)
|
|||||||||||||||||||||
In: Accounting
KAYAK Corporation makes a product with the following standard costs:
|
Standard Quantity |
Stnd Price/Rate per unit of Measure |
|||
|
Direct Materials (Lbs) |
2.8 lbs |
$4.00 / lb |
||
|
Direct Labor (Hrs) |
0.20 hrs / unit |
$21.00 / hr |
||
|
Variable OH Costs (based on Hrs) |
0.20 / hr |
$4.00 / hr |
Actual Results:
9,600 units produced
Direct material - $3.70 per lb for Total Cost of $99,937
Direct Labor – Total Cost of $37,050 with average labor rate of
$19.00 Total Overhead Cost of $7,995 allocated based on direct
labor hours
Required:
a. Compute the total product cost variance, in total. (7.5pts)
b. Compute the total materials quantity variance. (5pts)
c. Compute the materials price variance. (5pts)
d. Compute the total labor efficiency variance. (5pts)
e. Compute the labor rate variance. (5pts)
f. Compute the total variable overhead efficiency variance. (5pts)
g. Compute the variable overhead rate variance. (5pts)
In: Accounting
Assume the market for coffee mugs is perfectly competitive. Firms in the market are producing output, but are currently making economic losses.
a. How does the price of coffee mugs compare to the average total cost, the average variable cost, and the marginal cost of producing coffee mugs?
b. Draw two graphs, side by side, illustrating the present situation for the typical firm and in the market.
c. Assuming there is no change in either market demand or the firms’ cost curves, explain what will happen in the long run to the price of coffee mugs, marginal cost, average total cost, the quantity supplied by each firm, and the total quantity supplied to the market.
In: Economics
Smoky Mountain Corporation makes two types of hiking boots—the Xtreme and the Pathfinder. Data concerning these two product lines appear below:
| Xtreme | Pathfinder | |||||
| Selling price per unit | $ | 115.00 | $ | 85.00 | ||
| Direct materials per unit | $ | 65.40 | $ | 53.00 | ||
| Direct labor per unit | $ | 16.00 | $ | 10.00 | ||
| Direct labor-hours per unit | 1.6 | DLHs | 1.0 | DLHs | ||
| Estimated annual production and sales | 32,000 | units | 60,000 | units | ||
The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below:
| Estimated total manufacturing overhead | $ | 1,779,200 | ||
| Estimated total direct labor-hours | 111,200 | DLHs | ||
Required:
1. Compute the product margins for the Xtreme and the Pathfinder products under the company’s traditional costing system.
2. The company is considering replacing its traditional costing system with an activity-based costing system that would assign its manufacturing overhead to the following four activity cost pools (the Other cost pool includes organization-sustaining costs and idle capacity costs):
| Estimated Overhead Cost |
Expected Activity | |||||
| Activities and Activity Measures | Xtreme | Pathfinder | Total | |||
| Supporting direct labor (direct labor-hours) | $ | 556,000 | 51,200 | 60,000 | 111,200 | |
| Batch setups (setups) | 770,000 | 430 | 340 | 770 | ||
| Product sustaining (number of products) | 400,000 | 1 | 1 | 2 | ||
| Other | 53,200 | NA | NA | NA | ||
| Total manufacturing overhead cost | $ | 1,779,200 | ||||
Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system.
3. Prepare a quantitative comparison of the traditional and activity-based cost assignments.
Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your intermediate calculations to 2 decimal places and "Percentage" answers to 1 decimal place.)
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
In: Accounting
Smoky Mountain Corporation makes two types of hiking boots—the Xtreme and the Pathfinder. Data concerning these two product lines appear below:
| Xtreme | Pathfinder | |||||
| Selling price per unit | $ | 120.00 | $ | 87.00 | ||
| Direct materials per unit | $ | 65.20 | $ | 51.00 | ||
| Direct labor per unit | $ | 11.20 | $ | 8.00 | ||
| Direct labor-hours per unit | 1.4 | DLHs | 1.0 | DLHs | ||
| Estimated annual production and sales | 30,000 | units | 65,000 | units | ||
The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below:
| Estimated total manufacturing overhead | $ | 2,033,000 | ||
| Estimated total direct labor-hours | 107,000 | DLHs | ||
Required:
1. Compute the product margins for the Xtreme and the Pathfinder products under the company’s traditional costing system.
2. The company is considering replacing its traditional costing system with an activity-based costing system that would assign its manufacturing overhead to the following four activity cost pools (the Other cost pool includes organization-sustaining costs and idle capacity costs):
| Estimated Overhead Cost |
Expected Activity | |||||
| Activities and Activity Measures | Xtreme | Pathfinder | Total | |||
| Supporting direct labor (direct labor-hours) | $ | 631,300 | 42,000 | 65,000 | 107,000 | |
| Batch setups (setups) | 876,000 | 410 | 320 | 730 | ||
| Product sustaining (number of products) | 460,000 | 1 | 1 | 2 | ||
| Other | 65,700 | NA | NA | NA | ||
| Total manufacturing overhead cost | $ | 2,033,000 | ||||
Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system.
3. Prepare a quantitative comparison of the traditional and activity-based cost assignments.
Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your intermediate calculations to 2 decimal places and "Percentage" answers to 1 decimal place.)
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
In: Accounting
Use a business periodical or the Internet to determine how the value of the foreign currency of concern has changed over the last year. What is the mean percent-age change over these months? If you believed that the currency's value would continue following the recent trend, would it appreciate or depreciate in the near future?
In: Economics