Accounting Assignment due Tuesday midnight
cap479
acc_206_week_4_assignment_2015.docxA
ACC 206 Week 4 Assignment
Please complete the following exercises below in either Excel or a word document (but must be single document). You must show your work where appropriate (leaving the calculations within Excel cells is acceptable). Save the document, and submit it in the appropriate week using the Assignment Submission button.
2. Basic flexible budgeting Centron, Inc., has the following budgeted production costs:
|
Direct materials |
$0.40 per unit |
|
Direct labor |
1.80 per unit |
|
Variable factory overhead |
2.20 per unit |
|
Fixed factory overhead |
|
|
Supervision |
$24,000 |
|
Maintenance |
18,000 |
|
Other |
12,000 |
The company normally manufactures between 20,000 and 25,000 units each quarter. Should output exceed 25,000 units, maintenance and other fixed costs are expected to increase by $6,000 and $4,500, respectively.
During the recent quarter ended March 31, Centron produced 25,500 units and incurred the following costs:
|
Direct Materials |
|
$10,710 |
|
|
Direct Labor |
|
47,175 |
|
|
Variable factory overhead |
51,940 |
|
|
|
Fixed factory overhead |
|
|
|
|
Supervision |
|
24,500 |
|
|
Maintenance |
|
23,700 |
|
|
Other |
|
16,800 |
|
|
Total production costs |
|
$174,825 |
|
Instructions:
a. Prepare a flexible budget for 20,000, 22,500, and 25,000 units of activity.
b. Was Centron's experience in the quarter cited better or worse than anticipated? Prepare an appropriate performance report and explain your answer.
c. Explain the benefit of using flexible budgets (as opposed to static budgets) in the measurement of performance.
3. Straightforward variance analysis
Arrow Enterprises uses a standard costing system. The standard cost sheet for product no. 549 follows.
|
Direct materials: 4 units @ $6.50 |
|
$26.00 |
|
Direct labor: 8 hours @ $8.50 |
|
68 |
|
Variable factory overhead: 8 hours |
@ $7.00 |
56 |
|
Fixed factory overhead: 8 hours |
@ 2.5 |
20 |
|
Total standard cost per unit |
|
$170.00 |
The following information pertains to activity for December:
1. Direct materials acquired during the month amounted to 26,350 units at $6.40 per unit. All materials were consumed in operations.
2. Arrow incurred an average wage rate of $8.75 for 51,400 hours of activity.
3. Total overhead incurred amounted to $508,400. Budgeted fixed overhead totals $1.8 million and is spread evenly throughout the year.
4. Actual production amounted to 6,500 completed units.
Instructions:
a. Compute Arrow's direct material variances.
b. Compute Arrow's direct labor variances.
c. Compute Arrow's variances for factory overhead.
