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Chapter 23 Exercises

Flexible Budgets and Standard Cost Systems. Chapter 23 Exercises. Flexible Budgets. In-Class Exercises : Exercise No. Page E23-15 1451 Flexible Budget. (Use the format, as reflected on the next slide, to complete the exercise). Flexible Budget. Exercise Page

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Chapter 23 Exercises

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  1. Flexible Budgets and StandardCost Systems Chapter 23 Exercises

  2. Flexible Budgets • In-Class Exercises: Exercise No.Page E23-15 1451 Flexible Budget (Use the format, as reflected on the next slide, to complete the exercise)

  3. Flexible Budget • ExercisePage • E23-15 1451 Flexible Budget

  4. Flexible Budget OfficePlus sells its main product, ergonomic mouse pads and provides the following information: (1) Selling price of each pad…..$12.00 (2) Variable cost per pat………..$ 5.20 (3) Fixed costs up to 65,000 pads……$205,000 (4) Fixed costs above 65,000 pads…..$280,000 Prepare a monthly flexible budget for the product, showing sales revenue, variable costs, fixed costs, and income for volume levels of 45,000, 55,000, and 75,000 pads.

  5. Flexible Budget Compute the Sales Revenue: 45,000 x $12 = $540,000

  6. Flexible Budget

  7. Flexible Budget

  8. Flexible Budget

  9. Flexible Budget First two volume levels have the same fixed costs.

  10. Flexible Budget Fixed costs increase at the 75,000 volume level.

  11. Flexible Budget

  12. Flexible Budget End of Exercise

  13. Material & Labor Variances • In-Class Exercises: Exercise No.Page E23-19 1452 Material & Labor Variances

  14. Material & Labor Variances Exercise E23-19: Great Fender uses a standard cost accounting system and manufactures boat fenders. The following data is presented for 2014. (1) Manufactured 20,000 boat fenders. (2) Used 144,000 square feet of extruded vinyl, purchased at $1.05 per square foot. (3) Production required 420 direct labor hours at $13.50 per hour. (4) The direct materials standard was 7 sq. ft. of vinyl per fender, at a standard cost of $1.10 per sq. ft. (5) The labor standard was 0.025 direct labor hour per fender, at a standard cost of $12.50 per hour. Use this information to compute the cost and efficiency variances for direct materials and direct labor.

  15. Material & Labor Variances Direct Material Variances

  16. Direct Material Variances • Preliminary data/computations: • Actual quantity…………144,000 sq ft (given) • Standard quantity…….. 20,000units x 7 sq ft/unit = 140,000 sq ft • Actual price…………….. $1.05/sq ft (given) • Standard price…………. $1.10/sq ft (given)

  17. Direct Material Variances • Preliminary data/computations: • Actual quantity…………144,000 sq ft (given) • Standard quantity…….. 20,000units x 7 sq ft/unit = 140,000 sq ft • Actual price…………….. $1.05/sq ft (given) • Standard price…………. $1.10/sq ft (given) This item requires a computation based on the data presented.(20,000 units produced requiring 7 sq ft each)

  18. Direct Material Variances • Preliminary data/computations: • Actual quantity…………144,000 sq ft (given) • Standard quantity…….. 20,000units x 7 sq ft/unit = 140,000 sq ft • Actual price…………….. $1.05/sq ft (given) • Standard price…………. $1.10/sq ft (given)

  19. Direct Material Variances • Preliminary data/computations: • Actual quantity…………144,000 sq ft (given) • Standard quantity…….. 20,000units x 7 sq ft/unit = 140,000 sq ft • Actual price…………….. $1.05/sq ft (given) • Standard price…………. $1.10/sq ft (given)

  20. Direct Material Variances General Model Method

  21. Direct Material Variances

  22. Direct Material Variances Formula Method

  23. Direct Material Variances

  24. Material & Labor Variances Direct Labor Variances

  25. Material & Labor Variances Exercise E23-19: Great Fender uses a standard cost accounting system and manufactures boat fenders. The following data is presented for 2014. (1) Manufactured 20,000 boat fenders. (2) Used 144,000 square feet of extruded vinyl, purchased at $1.05 per square foot. (3) Production required 420 direct labor hours at $13.50 per hour. (4) The direct materials standard was 7 sq. ft. of vinyl per fender, at a standard cost of $1.10 per sq. ft. (5) The labor standard was 0.025 direct labor hour per fender, at a standard cost of $12.50 per hour. Use this information to compute the cost and efficiency variances for direct materials and direct labor.

  26. Direct Labor Variances • Preliminary data/computations: • Actual quantity……… 420 hours (given) • Standard quantity….. 20,000 units x .025 hours/unit = 500 hours • Actual price…………. $13.50/hour (given) • Standard price……… $12.50/hour (given)

  27. Direct Labor Variances • Preliminary data/computations: • Actual quantity……… 420 hours (given) • Standard quantity….. 20,000 units x .025 hours/unit = 500 hours • Actual price…………. $13.50/hour (given) • Standard price……… $12.50/hour (given) This item requires a computation based on the data presented.(20,000 units produced using .025 hours each)

  28. Direct Labor Variances • Preliminary data/computations: • Actual quantity……… 420 hours (given) • Standard quantity….. 20,000 units x .025 hours/unit = 500 hours • Actual price…………. $13.50/hour (given) • Standard price……… $12.50/hour (given)

  29. Direct Labor Variances • Preliminary data/computations: • Actual quantity……… 420 hours (given) • Standard quantity….. 20,000 units x .025 hours/unit = 500 hours • Actual price…………. $13.50/hour (given) • Standard price……… $12.50/hour (given)

  30. Direct Labor Variances General Model Method

  31. Direct Labor Variances

  32. Direct Labor Variances Formula Method

  33. Direct Labor Variances

  34. Direct Labor Variances End of Exercise

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