ACC EXCEL
Static & Flexible Budget
| Static Budget @ | |||
| 9,000 Units | Flexible Budget | ||
| Units | 9000 | ||
| Price | $ 31 | $ 31.00 | |
| Sales | $ 279,000 | ||
| Variable Costs | Variable Cost / Unit | ||
| Variable Manufacturing Costs | $ 189,000 | ||
| Shipping Costs (Selling) | $ 5,400 | ||
| Administrative Costs | $ 1,800 | ||
| Total Variable Costs | $ 196,200 | ||
| Fixed Expenses | |||
| Fixed Manufacturing Costs | $ 37,000 | ||
| Fixed Selling & Administrative Costs | $ 33,000 | ||
| Total Fixed Costs | $ 70,000 | ||
| Operating Income (Loss) | $ 12,800 |
Flexible Budget for Sales Level
| Flexible Budget | Flexible Budget for Various Levels | |||||
| Units | Formula | 7,000 | 8,000 | 9,000 | Varying levels of output | |
| Price | $ 31.00 | $ 31.00 | $ 31.00 | $ 31.00 | ||
| Sales | $ 217,000.00 | $ 248,000.00 | $ 279,000.00 | Sales Forecasts | ||
| Variable Costs | ||||||
| Variable Manufacturing Costs | ||||||
| Shipping Costs (Selling) | ||||||
| Administrative Costs | ||||||
| Total Variable Costs | ||||||
| Contribution Margin | ||||||
| Fixed Expenses | ||||||
| Fixed Manufacturing Costs | ||||||
| Fixed Selling & Administrative Costs | ||||||
| Total Fixed Costs | ||||||
| Operating Income (Loss) |
Further Look at Variances
| Actual Costs | Flexible | Flexible-Budget | Favorable or | Possible | |
| Incurred | Budget | Variances | Unfavorable | Explanation | |
| Units | 7000 | 7000 | |||
| Variable Costs | |||||
| Direct Materials | $ 69,920 | $ 70,000 | $ (80) | F | |
| Direct Labor | $ 61,500 | $ 56,000 | $ 5,500 | U | |
| Indirect Labor | $ 9,100 | $ 11,900 | $ (2,800) | F | Decreased setup time |
| Idel Time | $ 3,550 | $ 2,800 | $ 750 | U | Excessive machine breakdowns |
| Cleanup Time | $ 2,500 | $ 2,100 | $ 400 | U | Cleanup of spilled solvent |
| Supplies | $ 4,700 | $ 4,200 | $ 500 | U | Higher prices |
| Variable Manufacturing Costs | $ 151,270 | $ 147,000 | $ 4,270 | U | |
| Shipping | $ 5,000 | $ 4,200 | $ 800 | U | Use of air freight to meet delivery |
| Administration | $ 2,000 | $ 1,400 | $ 600 | U | Excessive copying and long-distance calls |
| Total Variable Costs | $ 158,270 | $ 152,600 | $ 5,670 | U | |
| Fixed Costs | |||||
| Factory Supervision | $ 14,700 | $ 14,400 | $ 300 | U | Salary increase |
| Factory Rent | $ 5,000 | $ 5,000 | $ - 0 | ||
| Equipment Depreciation | $ 15,000 | $ 15,000 | $ - 0 | ||
| Other Fixed Factory Costs | $ 2,600 | $ 2,600 | $ - 0 | ||
| Fixed Manufacturing Costs | $ 37,300 | $ 37,000 | $ 300 | U | |
| Fixed Selling & Admin. Costs | $ 33,000 | $ 33,000 | $ - 0 | ||
| Total Fixed Costs | $ 70,300 | $ 70,000 | $ 300 | U | |
| Total Variable & Fixed Costs | $ 228,570 | $ 222,600 | $ 5,970 | U |
Direct Materials & Labor
| Actual Cost Incurred | Flexible Budget | Flexible-Budget Variance | Favorable/Unfavorable | |||||||||||
| Direct Materials | $69,920 | $70,000 | $80 | F | ||||||||||
| Direct Labor | $61,500 | $56,000 | $5,500 | U | 7,000 units | 7,000 units | 9,000 units | |||||||
| Extra Information | ||||||||||||||
| Standard Quantity of Input | Standard Price per | Flexible Budget Formula | Cost | |||||||||||
| Allowed per Unit of Output | Unit of Input | per Unit of Output | Allowed | |||||||||||
| Direct Materials | 5 pounds | $2/pound | $10 | $ 70,000 | ||||||||||
| Direct Labor | 30 minutes | $16/hour | $8 | $ 56,000 | ||||||||||
| What Actually Happened | ||||||||||||||
| What was used (7,000 units) | Actual Rate | Totals | ||||||||||||
| Direct Materials | 36,800 pounds | $1.90/pound (Discount) | $69,920 | |||||||||||
| Direct Labor | 3,750 hours | $16.40/hour | $61,500 | |||||||||||
| 35,000 | Pounds we budgeted | |||||||||||||
| 56,000 | Hours we budgeted |
Price Variance
| (Actual Price - Standard Price) x Actual quantity used | |||
| Direct Materials | |||
| Acutal | $ 1.90 | Less | |
| Standard | $ 2.00 | ||
| Actual Quanity | 36,800 | ||
| Direct Labor | |||
| Acutal | $ 16.40 | More | Overtime |
| Standard | $ 16.00 | ||
| Actual Quanity | 3,750 |
Quantity Variance
| (Actual Quantity Used - Standard Quantity Allowed for Actual Output) x Standard Price | |
| Direct Materials | |
| Actual | 36,800 |
| Standard | 35,000 |
| Standard Price | $ 2.00 |
| Direct Labor | |
| Actual | 3,750.00 |
| Standard | 3,500.00 |
| Standard Price | $ 16.00 |
Flexible Budget Variance
| Price Variance + Quantity Variance = Flexible Budget Variance | |||||
| Direct Materials | F | ||||
| Flexible Budget Variance | |||||
| Direct Labor | U |
Homework Question #1
| Question 1: Find the standard cost for direct materials and direct labor | ||||||
| Standard Inputs Expected | Standard Price | |||||
| for Each Unit of | per Unit | |||||
| Output Achieved | of Input | |||||
| Direct Materials | 5 pounds | $10 per pound | ||||
| Direct Labor | 10 hours | $25 per hour | ||||
| 550 Trumpets are scheduled to be produced but only 525 were produced | ||||||
| 3,100 pounds of direct materials at a price of $9.00/pound were used | ||||||
| 5,500 hours of direct labor at a rate of $26/hour was used | ||||||
| Question 2: Find the price and quantity variances for direct materials and labor | ||||||
| Cost with | Flexible | |||||
| Direct Materials | Actual Cost Incurred | Price Variance | Standard Prices | Quantity Variance | Budget | |
| Cost with | Flexible | |||||
| Direct Labor | Actual Cost Incurred | Price Variance | Standard Prices | Quantity Variance | Budget | |
| Question 3: What clues for investigatoin are found in the variances? | ||||||