Shan Foods Pvt Ltd. factory overhead rate is Rs. 3 per hour. Budgeted overhead for 3000 hours per month is Rs.16000 and at 7000 hours is Rs.24000. Actual FOH for the month is Rs.18000 and actual volume is 5000 hours.
Required:

1. Variable overhead rate.

2. Budgeted fixed overhead.

3. Normal capacity hours.

4. Applied factory overhead.

5. Over or under applied factory overhead. What can be the possible reasons for the over or under applied FOH? And what measures should company take to overcome over applied FOH in future?

6. Spending Variance. What are the causes of unfavorable spending variance? And what measures should company take to reduce unfavorable spending variance in future?

7. Idle Capacity Variance. What are the causes of unfavorable idle capacity variance? And what measures should company take to reduce unfavorable idle capacity variance in future?

1. After a decrease in the interest rate we can expect to see

Select one:

a. a decrease in investment spending.

b. a decrease in government spending.

c. an increase in consumption spending.

d. a decrease in net exports.

2. Australian labour market could be considered to be at ‘full employment’

Select one:

a. when all unemployment is voluntary

b. when the cyclical unemployment is zero

c. when there are more unemployed workers than job vacancies

d. once the Job Keeper subsidy is completely phased out

3. If John is a ‘discouraged worker’, then

Select one:

a. he is considered to be out of the labour force

b. he is still considered to be part of the labour force

c. he is counted as unemployed

d. he is entitled to an income subsidy

4. The inflation rate

Select one:

a. will always be lower during a recession

b. is equal to the percentage change in the price level between time periods.

c. all of the given answers are correct

d. cannot be negative

Bullseye has the following actual results for the month of September:

Required:
1. Calculate the direct materials price, quantity, and total spending variances for Bullseye.
2. Calculate the direct labor rate, efficiency, and total spending variances for Bullseye.
3. Calculate the variable overhead rate, efficiency, and total spending variances for Bullseye.

1. A company’s standard cost information for last year follows:

The company had the following actual results for the past year:

1. Direct Materials Price Variance

2. Direct Materials Quantity Variance: =

3. Total Direct Materials Spending Variance

4. Direct Labor Rate Variance

5. Direct Labor Efficiency Variance

6. Total Direct Labor Spending Variance

7. Variable Overhead Rate Variance

8. Variable Overhead Efficiency

1. Variable Overhead Spending Variance

Mastery Problem: Introduction to Managerial Accounting

Able Baker Charlie Company

Charles Maxwell is starting a cheesecake bakery, Able Baker Charlie Company, to produce and sell different flavored cheesecakes to restaurants and the general public. He has just begun his study of accounting, and is a bit confused about the many types of reports he has read about and how they will help him run his business. He asks you to help him clarify what the differences between managerial accounting and financial accounting are. He’s also wondering how to set up his inventory, how to classify the costs of his business, and how to fill in some missing information.

Managerial vs. Financial

Select whether the following characteristics are most often associated with managerial accounting or financial accounting.

Primarily used for internal decision makingManagerial Accounting

Generally Accepted Accounting Principles (GAAP) must be usedFinancial Accounting

Prepared statements usually pertain to the company as a whole rather than individual departments or productsFinancial Accounting

Information provided will often be subjective, such as estimated future resultsManagerial Accounting

Often prepared on an as-needed basis rather than at fixed intervalsManagerial Accounting

Feedback

Review the differences between managerial and financial accounting, and how each type of accounting is used in the organization and for management processes.

Cost Classification

Charles has provided some of the costs he expects to incur as follows. Decide on the classifications that could be applied to each of these costs using the table provided. The cost object in each case is the cheesecake.

(Select "Yes" or "No" from the below dropdowns.)

CostProduct
CostPeriod
CostDirect
MaterialsDirect
LaborFactory
OverheadSelling
ExpenseAdministrative
ExpenseDirect
CostIndirect
CostPrime
CostConversion
Cost

Eggs used to make cheesecakesYes No Yes No No No No Yes No Yes No

Baker’s wagesYes No No Yes No No No Yes No Yes Yes

Delivery driver wagesNo Yes No No No Yes No No No No No

Depreciation of office computersNo Yes No No No No Yes No No No No

Power to run the cheesecake ovensYes No No No Yes No No No Yes No Yes

President’s salaryNo Yes No No No No Yes No No No No

Sales commissionsNo Yes No No No Yes No No No No No

Factory supervisor salaryYes No No No Yes No No No Yes No Yes

Feedback

Review the definitions of each type of cost. Note that each cost may be in more than one category.

Financial Statements

Charles found some sample income statements and balance sheets on the Internet, and asked which of them might be most appropriate for a manufacturing business like his. Review income statements A and B, and balance sheets C and D. Determine which income statement and balance sheet would be most appropriate for a manufacturing business like Able Baker Charlie Company.

Income Statement A

Sample Company A
Income Statement
For the Year Ended December 31, 20Y8

Sales$42,000

  Finished goods inventory, January 1, 20Y8$5,250

  Cost of goods manufactured6,400

  Cost of finished goods available for sale$11,650

  Finished goods inventory, December 31, 20Y8(400)

  Cost of goods sold(11,250)

Gross profit$30,750

Operating expenses:

  Selling expenses$6,400

  Administrative expenses5,250

    Total operating expenses(11,650)

Net income$19,100

Income Statement B

Sample Company B
Income Statement
For the Year Ended December 31, 20Y8

Sales$42,000

  Beginning inventory$5,250

  Net purchases6,400

  Inventory available for sale$11,650

  Ending inventory(400)

  Cost of goods sold(11,250)

Gross profit$30,750

Operating expenses:

  Selling expenses$6,400

  Administrative expenses5,250

    Total operating expenses(11,650)

Net income$19,100

Balance Sheet C

Sample Company C
Balance Sheet
December 31, 20Y8

Assets

Cash$20,800

Accounts receivable (net)10,000

Inventory6,000

Supplies2,100

Land17,000

Total assets$55,900

Liabilities

Accounts payable$17,800

Stockholders’ Equity

Common stock$19,000

Retained earnings19,100

Total stockholders’ equity38,100

Total liabilities and stockholders’ equity$55,900

Balance Sheet D

Sample Company D
Balance Sheet
December 31, 20Y8

Assets

Cash$20,800

Accounts receivable (net)10,000

Inventory:

  Direct materials$2,500

  Work in process1,500

  Finished goods2,000

  Total inventory6,000

Supplies2,100

Land17,000

Total assets$55,900

Liabilities

Accounts payable$17,800

Stockholders’ Equity

Common stock$19,000

Retained earnings19,100

Total stockholders’ equity38,100

Total liabilities and stockholders’ equity$55,900

Which income statement is most appropriate for a manufacturing business?

Income statement A

Which balance sheet is most appropriate for a manufacturing business?

Balance sheet D

Feedback

Think about which accounts would be needed in a manufacturing environment.

Costs and Balances

At the end of February, after the second month of operations of Able Baker Charlie Company, Charles shows you the data he’s collected, but he was unable to figure out some of the amounts. Review the following data and fill in the missing amounts on the chart for Able Baker Charlie Company. Note: It may be helpful to use T accounts to map the flow of the amounts through the manufacturing accounts and solve for the missing dollar values. It may also be helpful to review the steps for determining the cost of materials used, total manufacturing cost incurred, and cost of goods manufactured.

Data for February

Decrease in materials inventory$3,300

Materials inventory on Feb. 2850% of materials inventory on Jan. 31

Direct materials purchased$11,700

Direct materials used3 times the direct labor incurred

Total manufacturing costs incurred in period$28,700

Total manufacturing costs incurred in period70% of Cost of Goods Manufactured

Total manufacturing costs incurred in period$7,000 less than Cost of Goods Sold

Account Balances

AccountJan. 31Feb. 28Costs Incurred

Materials Inventory$$Direct Materials Used$

Work in Process Inventory21,000Direct Labor Incurred

Finished Goods Inventory16,500Factory Overhead Incurred

Cost of Goods Sold

Mastery Problem: Introduction to Managerial Accounting

Able Baker Charlie Company

Charles Maxwell is starting a cheesecake bakery, Able Baker Charlie Company, to produce and sell different flavored cheesecakes to restaurants and the general public. He has just begun his study of accounting, and is a bit confused about the many types of reports he has read about and how they will help him run his business. He asks you to help him clarify what the differences between managerial accounting and financial accounting are. He’s also wondering how to set up his inventory, how to classify the costs of his business, and how to fill in some missing information.

Managerial vs. Financial

Select whether the following characteristics are most often associated with managerial accounting or financial accounting.

Primarily used for internal decision makingManagerial Accounting

Generally Accepted Accounting Principles (GAAP) must be usedFinancial Accounting

Prepared statements usually pertain to the company as a whole rather than individual departments or productsFinancial Accounting

Information provided will often be subjective, such as estimated future resultsManagerial Accounting

Often prepared on an as-needed basis rather than at fixed intervalsManagerial Accounting

Feedback

Review the differences between managerial and financial accounting, and how each type of accounting is used in the organization and for management processes.

Cost Classification

Charles has provided some of the costs he expects to incur as follows. Decide on the classifications that could be applied to each of these costs using the table provided. The cost object in each case is the cheesecake.

(Select "Yes" or "No" from the below dropdowns.)

CostProduct
CostPeriod
CostDirect
MaterialsDirect
LaborFactory
OverheadSelling
ExpenseAdministrative
ExpenseDirect
CostIndirect
CostPrime
CostConversion
Cost

Eggs used to make cheesecakesYes No Yes No No No No Yes No Yes No

Baker’s wagesYes No No Yes No No No Yes No Yes Yes

Delivery driver wagesNo Yes No No No Yes No No No No No

Depreciation of office computersNo Yes No No No No Yes No No No No

Power to run the cheesecake ovensYes No No No Yes No No No Yes No Yes

President’s salaryNo Yes No No No No Yes No No No No

Sales commissionsNo Yes No No No Yes No No No No No

Factory supervisor salaryYes No No No Yes No No No Yes No Yes

Feedback

Review the definitions of each type of cost. Note that each cost may be in more than one category.

Financial Statements

Charles found some sample income statements and balance sheets on the Internet, and asked which of them might be most appropriate for a manufacturing business like his. Review income statements A and B, and balance sheets C and D. Determine which income statement and balance sheet would be most appropriate for a manufacturing business like Able Baker Charlie Company.

Income Statement A

Sample Company A
Income Statement
For the Year Ended December 31, 20Y8

Sales$42,000

  Finished goods inventory, January 1, 20Y8$5,250

  Cost of goods manufactured6,400

  Cost of finished goods available for sale$11,650

  Finished goods inventory, December 31, 20Y8(400)

  Cost of goods sold(11,250)

Gross profit$30,750

Operating expenses:

  Selling expenses$6,400

  Administrative expenses5,250

    Total operating expenses(11,650)

Net income$19,100

Income Statement B

Sample Company B
Income Statement
For the Year Ended December 31, 20Y8

Sales$42,000

  Beginning inventory$5,250

  Net purchases6,400

  Inventory available for sale$11,650

  Ending inventory(400)

  Cost of goods sold(11,250)

Gross profit$30,750

Operating expenses:

  Selling expenses$6,400

  Administrative expenses5,250

    Total operating expenses(11,650)

Net income$19,100

Balance Sheet C

Sample Company C
Balance Sheet
December 31, 20Y8

Assets

Cash$20,800

Accounts receivable (net)10,000

Inventory6,000

Supplies2,100

Land17,000

Total assets$55,900

Liabilities

Accounts payable$17,800

Stockholders’ Equity

Common stock$19,000

Retained earnings19,100

Total stockholders’ equity38,100

Total liabilities and stockholders’ equity$55,900

Balance Sheet D

Sample Company D
Balance Sheet
December 31, 20Y8

Assets

Cash$20,800

Accounts receivable (net)10,000

Inventory:

  Direct materials$2,500

  Work in process1,500

  Finished goods2,000

  Total inventory6,000

Supplies2,100

Land17,000

Total assets$55,900

Liabilities

Accounts payable$17,800

Stockholders’ Equity

Common stock$19,000

Retained earnings19,100

Total stockholders’ equity38,100

Total liabilities and stockholders’ equity$55,900

Which income statement is most appropriate for a manufacturing business?

Income statement A

Which balance sheet is most appropriate for a manufacturing business?

Balance sheet D

Feedback

Think about which accounts would be needed in a manufacturing environment.

Costs and Balances

At the end of February, after the second month of operations of Able Baker Charlie Company, Charles shows you the data he’s collected, but he was unable to figure out some of the amounts. Review the following data and fill in the missing amounts on the chart for Able Baker Charlie Company. Note: It may be helpful to use T accounts to map the flow of the amounts through the manufacturing accounts and solve for the missing dollar values. It may also be helpful to review the steps for determining the cost of materials used, total manufacturing cost incurred, and cost of goods manufactured.

Data for February

Decrease in materials inventory$3,300

Materials inventory on Feb. 2850% of materials inventory on Jan. 31

Direct materials purchased$11,700

Direct materials used3 times the direct labor incurred

Total manufacturing costs incurred in period$28,700

Total manufacturing costs incurred in period70% of Cost of Goods Manufactured

Total manufacturing costs incurred in period$7,000 less than Cost of Goods Sold

Account Balances

AccountJan. 31Feb. 28Costs Incurred

Materials Inventory$$Direct Materials Used$

Work in Process Inventory21,000Direct Labor Incurred

Finished Goods Inventory16,500Factory Overhead Incurred

Cost of Goods Sold

Mastery Problem: Introduction to Managerial Accounting

Able Baker Charlie Company

Charles Maxwell is starting a cheesecake bakery, Able Baker Charlie Company, to produce and sell different flavored cheesecakes to restaurants and the general public. He has just begun his study of accounting, and is a bit confused about the many types of reports he has read about and how they will help him run his business. He asks you to help him clarify what the differences between managerial accounting and financial accounting are. He’s also wondering how to set up his inventory, how to classify the costs of his business, and how to fill in some missing information.

Managerial vs. Financial

Select whether the following characteristics are most often associated with managerial accounting or financial accounting.

Primarily used for internal decision makingManagerial Accounting

Generally Accepted Accounting Principles (GAAP) must be usedFinancial Accounting

Prepared statements usually pertain to the company as a whole rather than individual departments or productsFinancial Accounting

Information provided will often be subjective, such as estimated future resultsManagerial Accounting

Often prepared on an as-needed basis rather than at fixed intervalsManagerial Accounting

Feedback

Review the differences between managerial and financial accounting, and how each type of accounting is used in the organization and for management processes.

Cost Classification

Charles has provided some of the costs he expects to incur as follows. Decide on the classifications that could be applied to each of these costs using the table provided. The cost object in each case is the cheesecake.

(Select "Yes" or "No" from the below dropdowns.)

CostProduct
CostPeriod
CostDirect
MaterialsDirect
LaborFactory
OverheadSelling
ExpenseAdministrative
ExpenseDirect
CostIndirect
CostPrime
CostConversion
Cost

Eggs used to make cheesecakesYes No Yes No No No No Yes No Yes No

Baker’s wagesYes No No Yes No No No Yes No Yes Yes

Delivery driver wagesNo Yes No No No Yes No No No No No

Depreciation of office computersNo Yes No No No No Yes No No No No

Power to run the cheesecake ovensYes No No No Yes No No No Yes No Yes

President’s salaryNo Yes No No No No Yes No No No No

Sales commissionsNo Yes No No No Yes No No No No No

Factory supervisor salaryYes No No No Yes No No No Yes No Yes

Feedback

Review the definitions of each type of cost. Note that each cost may be in more than one category.

Financial Statements

Charles found some sample income statements and balance sheets on the Internet, and asked which of them might be most appropriate for a manufacturing business like his. Review income statements A and B, and balance sheets C and D. Determine which income statement and balance sheet would be most appropriate for a manufacturing business like Able Baker Charlie Company.

Income Statement A

Sample Company A
Income Statement
For the Year Ended December 31, 20Y8

Sales$42,000

  Finished goods inventory, January 1, 20Y8$5,250

  Cost of goods manufactured6,400

  Cost of finished goods available for sale$11,650

  Finished goods inventory, December 31, 20Y8(400)

  Cost of goods sold(11,250)

Gross profit$30,750

Operating expenses:

  Selling expenses$6,400

  Administrative expenses5,250

    Total operating expenses(11,650)

Net income$19,100

Income Statement B

Sample Company B
Income Statement
For the Year Ended December 31, 20Y8

Sales$42,000

  Beginning inventory$5,250

  Net purchases6,400

  Inventory available for sale$11,650

  Ending inventory(400)

  Cost of goods sold(11,250)

Gross profit$30,750

Operating expenses:

  Selling expenses$6,400

  Administrative expenses5,250

    Total operating expenses(11,650)

Net income$19,100

Balance Sheet C

Sample Company C
Balance Sheet
December 31, 20Y8

Assets

Cash$20,800

Accounts receivable (net)10,000

Inventory6,000

Supplies2,100

Land17,000

Total assets$55,900

Liabilities

Accounts payable$17,800

Stockholders’ Equity

Common stock$19,000

Retained earnings19,100

Total stockholders’ equity38,100

Total liabilities and stockholders’ equity$55,900

Balance Sheet D

Sample Company D
Balance Sheet
December 31, 20Y8

Assets

Cash$20,800

Accounts receivable (net)10,000

Inventory:

  Direct materials$2,500

  Work in process1,500

  Finished goods2,000

  Total inventory6,000

Supplies2,100

Land17,000

Total assets$55,900

Liabilities

Accounts payable$17,800

Stockholders’ Equity

Common stock$19,000

Retained earnings19,100

Total stockholders’ equity38,100

Total liabilities and stockholders’ equity$55,900

Which income statement is most appropriate for a manufacturing business?

Income statement A

Which balance sheet is most appropriate for a manufacturing business?

Balance sheet D

Feedback

Think about which accounts would be needed in a manufacturing environment.

Costs and Balances

At the end of February, after the second month of operations of Able Baker Charlie Company, Charles shows you the data he’s collected, but he was unable to figure out some of the amounts. Review the following data and fill in the missing amounts on the chart for Able Baker Charlie Company. Note: It may be helpful to use T accounts to map the flow of the amounts through the manufacturing accounts and solve for the missing dollar values. It may also be helpful to review the steps for determining the cost of materials used, total manufacturing cost incurred, and cost of goods manufactured.

Data for February

Decrease in materials inventory$3,300

Materials inventory on Feb. 2850% of materials inventory on Jan. 31

Direct materials purchased$11,700

Direct materials used3 times the direct labor incurred

Total manufacturing costs incurred in period$28,700

Total manufacturing costs incurred in period70% of Cost of Goods Manufactured

Total manufacturing costs incurred in period$7,000 less than Cost of Goods Sold

Account Balances

AccountJan. 31Feb. 28Costs Incurred

Materials Inventory$$Direct Materials Used$

Work in Process Inventory21,000Direct Labor Incurred

Finished Goods Inventory16,500Factory Overhead Incurred

Cost of Goods Sold

Absorption and Variable Costing Income Statements

During the first month of operations ended July 31, YoSan Inc. manufactured 10,600 flat panel televisions, of which 9,800 were sold. Operating data for the month are summarized as follows:

Required:

1. Prepare an income statement based on the absorption costing concept.

1. Sales - (cost of goods manufactured - ending inventory*) = Gross profit; gross profit - selling and administrative expenses = income from operations
*(Manufactured Units - Sold units) x (total manufacturing costs/manufactured units)

Learning Objective 1 and Learning Objective 2.

2. Prepare an income statement based on the variable costing concept.

Terry is in first grade. He frequently talks out loud to himself while trying to perform a building block game which most other children in the class can perform. The teacher believes Terry is too immature for first grade. The Bayley Scale test performance by Terry shows a below average performance. As a result, the teacher wants to place Terry in a remedial kindergarten class. Analyze and discuss how a teacher utilizing a Vygotsky based teaching strategy would approach this problem and provide a brief argument for a different strategy to that proposed by the teacher.