Managerial Accounts

I

486

Exercise 1 l-27 Srandard Hours Allowed:

Flexible Budgetln g; l'vlultiple

Products

Exercise 1l-28 Construct a Flex ble 0verhead

Brdget: Hosnital

Exercise 11*29 Interpretation of Variable-

Overhead iff icrency Variance

Exercise 1 1-30 Reconstruct lVlssing

lnfonraticn lrcr.i Partral Data

Chapter 1 1 Flexible Budgeting and the N4anagement of Overhead and Suppotl Aclivity Costs

.' fiqgd-rlerhcrrd htrdgct rariancc. rL Fired-rrrerhcld r,rlttttte raritltc.'.

2. Construct an Ercel sprcadsheet to solve the pre ceding requirement. Shcxv lrou,the solution r.vill change if the tblkr*'ing inlhnnation changes: acttral output rvas 9.100 cases" and actual variabie overhead r.ras Ii39-5.000.

[:rcning Siar. Inc. produces hinocLrlars ol-lno c1r"ralit1, levels: licld ancl prolessional. I'he field model leqr-rircs three direet-labor hours. *'hiie the trrlolissional hiroculars require fir'e ltoLrrs. l-hc firtr r:ses clirect-labor hours fbr flerible budgeting.

Required:

L IIou ntan_r'stiurdarcl hours are alloilcrl in \1a1'. when 200 field nrodels and -i()0 pi'oi'essional binocu i ars are niar'lufhct urcd'l

2. Supposcthecompan)'baseditsilerihleolerhcadbLidgetfbrN{11'onthcnunrherolbinoculars nranulactured. rvhich is 500. What dilllculties r.r'ould this approach cause')

'I hc controller for llairrbor.r'Childrer's llospitai. located in Niunich" Cernran,v, estimates that lhc hos-

pital uses i0 kilouatL-hours o1'electricitl per paticnt-day. and that the electric rate u,ill be .10 euro pcr kiloq,att-hour. I'he hospital also pa1's a fired nronthll'charge of 1.000 euros to the clcctric ulilit,r to rcnt cmargenc) backLrp eicctric gerlerators.

Required: I onslruct a flerib]e budgct lbr tlre hospital's electricitl, costs usittg each o1'the fbllorving techniqucs.

l. F(,r'n)ula tltrilrlc htrrlget. 2. Colurrnar flerible budget fbr 30.000. 40.000 and 50.000 patient-days o1-activitl'. [,ist variable and

lired electricitl costs separatcl),.

Yxr reccntll, received the lblio*ing nole irorn tire production supervisor ol'lhc contpattl' *here lr-ru ,ccr!e as conlroller. "l don't understand lhese crazf i'ariable<rverhead el)icicncy rariances. N'{1 cnrplol'- ees are \.cl'] carelirl in thcir r-rsc o1-clectricitr and manulicturirrg suptrrlies. and t'e use ver] little irttlircct labor. \\'hat are \\,e supposcd to do?'' Write a brie i' niemo responding to the produetion iupL'r\ isr,r s con aern.

Ylru broughL 1,our lrork honrc onc evcning. and 1'oul nepher.r, spilled his chocolalc nrilli shake on the variancc repon ]'ou rrerc preparing. i'irrlunatcly. )ol.l \\'ere able to rcconslt'ucl the obliterated infirmra- tiorr h'om thc rernaining data. I:i1l in the missing lruurbers belon,. (/1lrrl. ll is hclplui to solre lbr thc uuknonrs in the onler indicated bl the lefle'rs in thc lblioning table.)

Slandard machine hOurs per unit 01 cutput ...,.,.,,,,,.,

Standard var iable-overhead rate per nrachine h0ur .........,.,.,...

Actlral variable-overhead rate per machine hour

Actlral machine hours per unit of output ,..,...,.,.,.....,,..

B,dgetetl' xeo oJe' hpad ..............

Actual fixed overhead ...........,..

Budgeted producti0n in units ,..,,...,....,

Actual production in unrts ....

,r r aiili. ,, '1. I u rrr'r',J \'r rr :- ,/.,ar.[,rr..1 .'li.:1rr,',r,,... Fixed-overhead budget varanco $ I 5,000 U Fixed-overhead volume varlance S Total achral overhead ...,...,,,.... $713,000 Total budgeted overhead (flexible budget) ,,,,..,,,.,...." e Total budgeted overhead (statrc budSet) ....,.........,...... f Total applied overhead ,.......,.,.,. $816,000

4 hours

$8.00

b

d

$50,000

a

25,000

C

$ 72,000 u

$ 1 92,1100 F