Practice problem 2. MajorNet makes high-speed Internet connectors• Static budget:o Budgeted variable costs = $145/connectoro Budgeted fixed costs = $7,500/montho Based on production and sales of 100 connectors in November• Actually, produced and sold 84 connectors• Actual total cost = $21,0001) Total flexible budget cost for 84 connectors/month2-1) Sales volume variance for total cost2-2) Is this variance good news?3-1) Flexible budget variance for total cost =3-2) Is this variance good news?=

1. Major Net's total flexible budget cost for 84 connections is (84 x 145) + 7,500 = $ 19,680.

1) Total flexible budget cost for 84 connectors/month 2-1) Sales volume variance for total cost = 2-2) Is this variance good news? 3-1) Flexible budget variance for total cost = 3-2) Is this variance good news? =

1) Total flexible budget cost for 84 connectors/month 2-1) Sales volume variance for total cost = 2-2) Is this variance good news? 3-1) Flexible budget variance for total cost = 3-2) Is this variance good news? =

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Management by Exception

A manager’s job is a very tough one. A manager needs to look at the various areas of work and as a manager he has to look after two or more important jobs or activities at the same time for the growth of the business. In order to do all these things in an effective manner, a manager must adopt or practice different management styles and tactics.

Question

Practice problem 2. MajorNet makes high-speed Internet connectors
• Static budget:
o Budgeted variable costs = $145/connector
o Budgeted fixed costs = $7,500/month
o Based on production and sales of 100 connectors in November
• Actually, produced and sold 84 connectors
• Actual total cost = $21,000
1) Total flexible budget cost for 84 connectors/month
2-1) Sales volume variance for total cost
2-2) Is this variance good news?
3-1) Flexible budget variance for total cost =
3-2) Is this variance good news?
=

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