Standard Costs - Part 2 - 11-16

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11. Problem 21-3A Part 3

3. The company's business conditions are impmling. One prrssible result is a sales \olume of approximately 18,fi)0 units. The company president is confident that this \plume is within the rcle\Bnt range of existing capacity. Hor,v much \ilould operating income il:crease orgr the 2011 budgeled amount of $379,000 if lhis lercl is reached without increasing capacity? {Do not round intermediate calculatione, Omit the "$" sign in your reryon*.)

Operating income increase $

ldVorksheet

Fra$leni ?f -34 Parf 3

Learning ilbjective: 21-F1 Prepare a *exible budget and interpret a flexible budget perf*rmance report.

Difficulty Mediurn

12.

Probfem 21-3A Part 4 4. An unhrcrable change in business is rcmotely possible; in this case, pDduction and sales rolume br

2011 could fall to 12,000 units. Ho,v much income (or loss) tom operations would occur if sales \Dlume hlls to this lelel? flnput the amount as positive value. Do nol round intermediate calculations Omit the '$" dgn in your response.)

ffi$_ Worksheet

Pr*bJem ?1-34 Part 4 Learning Object r{}: 21-P1 Prepsre a flexible budget and interpret a flr:xible budget performance repor"t.

Problem 21-5A Flexible budget preparation; computatian af mateilals, labar, and overhead wriances: and overhead variance repart L.Q. Pl, P2, P3, C2 [fhe fallowing intomalian applies b the guestions dlsplayed belowJ

Kwikeee Cornpany set the following standard costs br one unit of its product.

Direct matedals {{3.0 hs. @ $+.o per h.) $ 12.00 Dir€ctlabor(1.5hrs. @$14.0perhr.) 21.0O Orerhead (1.5 hns. @ $18.50 perhr.) 27.75 Total sfandard cost $ 60.75

The F€detemined o\,ethead rate ($18.50 psr direct labor hour) is basr:d on an expected wlume of 75% of the factory's capacity of 20,000 units pet month. Fdlowing are the conrpany's budgeted oerhead costs per month at the 75% le\el-

Owrhead Budget (75% Capacity) Variable owrhead costs

lndirect materials lndirect labor

Power Repairs and maintenance

Total wriable orerhead costs Fixed o\,erhead costs

Depreciation*buil di ng Depreciiltion*rn acni n ery Taxes and insufiance Supenisrion

Total fixed overhead cost$

Total ow*rcad costs

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$ 15,000 75,000

15,000

30,000

$ 135,000

24,440 70,ooa 20,000

167,250

?,81,?:50

$ 416,250

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IiA The com4nt incuned the fullarrrdng actual costs ufien it operated at

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6 capcity in fttober,

195,300 443,300

57S,250

of each wriable and fixed cost at amqunt per unit ansrers to 2

COMPANY Oterhead Budgets

Ended Oct$er 31 ble Budget

$ 43,250 176,500 17,zffi 34,500 24,OW 94,500 19,000

167,250

Total castls

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$ection Brpak I

1,213,950

Problam 21-5A b le b udget preparatian ; campufutian af m ials, Iab or, and averhead yanances,'and o P3, C2

d van'ance rcport L.A. Pf, P2,

Vadable Amount per Unit

Total Fixed Cost

Flexible Budget ftr Unit Sales

of 13,000

FlexiHe Budget br Unit $ales

of 15,000

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Flexible Budget for Unit Sales

of 17,000

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Leaming Objectiw : 21 -?3 Campute ausrhead vartances.

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Problem 21-5A Paft 2 I

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toial rsriaHe costs

fotaflornrhead costs

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Prablem 21-SA Pad 3 3. Compute the direct mat€rials c6t \Edance, including lts pric'!, and quantity rariances.{lndicate the

effec't of each variance by selecling "F" for favorable, "U" for unfavorable, and "None" for no etr€Et {i-e., zero variance}. lnput all amounts as posilive values Leave no calls blank - be certain to enter "0" wherever required. Omit the .$. dgn irr your response,)

Direct materials cest \rariance $ o ll-a :*.-_*T.'l

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Pric;e rariance

Quantity variance

Worksheet

Prob l*m 21 -fiA Part 3

iir !* rrn ' ' -" "*::+' :tC Learning Objectiw: ?1-p3 ComBute ovsrhsad \Eriances.

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Problem 21-SA Part 4 4. Compute the dircct labor cost \€dance, including its rate and e{liciency \adances.(lhdicate the effect

of each variance by selecting "F* for favorable, "U" for unrfay6pS;", and "None" for no efecd {i.e., zero variancei. lnput all amounts as positave valueg i..eave no e*lls blank - be certain to enter "0" wherever required, Omit the "$' dgn in your resp,:rnse.)

Directlaborcostrariance $ o [E-]T:l:lFl Raterariance $, o, IU-.., -lT-Jl Effciency\adance $ o

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Worksheet Leaming Obie6li\le: 21-C2 Describe lariances and Leamlng Obiectile: 21-P3 Csmpute ot€rhead whattheyre\€al aboutperformance. \4ariances.

problem21-SApad4 LearningObjectite:21-P1 Prepare af,exiblebudget and inlerprei a ir:rxible budget performance report.

Leaming Objecti,e: 21-P2 Compule materials and labor \,ariances.

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Problem 21-5A Part 5 5. Prepare a detailed owrtead \ariance report that shorvs the \,ariiinces br indilidual items of orerhead.

{Leave no cells blank - be certain lo enter "0" rrherever nrquired. tndicate the effeet of each variance by sel€cding "F" for favorable, 'U" for unfayorable, and "None" for no effect {i,e., zero variance). lnpul all amounts as positive values, Omit the

KWIKEZE CC,rtu1P461" Owrhead Varial,ice Report

For Month Ended October 31

% of capacity

% of capacity

ffi Flelible Fj.fdget ,Agtug,l, Re$illfs Vgrianpes

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Volurrne Variance

Expected production level

Production lewl achiered

Volume rariance

Contrdlable Variance Varierble owrhead costs

hrrdircet labor i'r

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o. offi Tol;al wriable costs

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otrerhead costs

fixed cmts

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Learning Obj : 21-C2 Describe rmriances and what they rew pertar*r*nce.

Leaming Obj e:21-FI Prepare *frexble budget xible budget performance reporl.and inlerpreta

Learning Obj lablluri:nc€s:

Learning Objectiw: 21 -P3 Compute e\Erhead rariances.

: 21-P2 Compute ma8rials and

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