Learning Materials
Features
Discover
Chapter 23: Q3RQ (page 1305)
Question: What is a static budget performance report?
Answer
The reportreflects the difference between theactual activity level achieved by the business entity and thelevel of activity stated in the static budget.
Over 30 million students worldwide already upgrade their learning with 91影视!
All the tools & learning materials you need for study success - in one app.
Get started for free
What is a variance?
The following direct labor variance analysis was performed for Morris.
AC 脳 AQ \(19,800 SC 脳 SQ \)14.00 per DLHr 脳 1,350 DLHr \(18,900 SC 脳 AQ \)14.00 per DLHr 脳 1,800 DLHr \(11.00 per DLHr 脳 1,800 DLHr \)25,200 Efficiency Variance Cost Variance \(5,400 F \)6,300 U
Requirements
1. Record Morris鈥檚 direct labor journal entry (use Wages Payable).
2. Explain what management will do with this variance information.
Question:Top managers of Marshall Industries predicted 2018 sales of 14,800 units of its product at a unit price of \(9.50. Actual sales for the year were 14,600 units at \)12.00 each. Variable costs were budgeted at \(2.00 per unit, and actual variable costs were \)2.10 per unit. Actual fixed costs of \(48,000 exceeded budgeted fixed costs by \)4,000.
Prepare Marshall鈥檚 flexible budget performance report. What variance contributed most to the year鈥檚 favorable results? What caused this variance?
Preparing a flexible budget computing standard cost variance
Morton Recliners manufactures leather recliners and uses flexible budgeting and a
standard cost system. Morton allocates overhead based on yards of direct materials.
The company鈥檚 performance report includes the following selected data:
Static Budget Actual Results (1,000 recliners) (980 recliners) |
Sale (1,000 recliners \(505 each) \) 505,000 (980 recliners \(480 each) \) 470,400 |
Variable Manufacturing Costs: Direct Materials (6,000 yds. @ \(8.60/yd.) 51,600 (6,143 yds. @ \)8.40/yd.) 51,601 Direct Labor (10,000 DLHr @ \(9.20/DLHr) 92,000 (9,600 DLHr @ \)9.30/DLHr) 89,280 Variable Overhead (6,000 yds. @ \(5.20/yd.) 31,200 (6,143 yds. @ \)6.60/yd.) 40,544 |
Fixed Manufacturing Costs: Fixed Overhead 60,600 62,600 Total Cost of Goods Sold 235,400 244,025 |
Gross Profit \( 269,600 \) 226,375 |
Requirements
1. Prepare a flexible budget based on the actual number of recliners sold.
2. Compute the cost variance and the efficiency variance for direct materials and for direct labor. For manufacturing overhead, compute the variable overhead cost,variable overhead efficiency, fixed overhead cost, and fixed overhead volume variances. Round to the nearest dollar.
3. Have Morton鈥檚 managers done a good job or a poor job controlling materials, labor, and overhead costs? Why?
4. Describe how Morton鈥檚 managers can benefit from the standard cost system.
Question:What is a standard cost system?
What do you think about this solution?
We value your feedback to improve our textbook solutions.
Explanations 
Textbooks 
Flashcards 
91影视 AI 
Notes 
Study Plans 
Study Sets 
Find a degree 
Magazine