asked that you review the company's costing system and "do what you can to help us get better control of our manufacturing overhead costs." You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March: Utilities Maintenance Supplies Indirect labor Depreciation Cost Formula $16,000+ $0.19 per machine-hour $38,900 $1.30 per machine-hour $0.48 per machine-hour $94,000+ $1.20 per machine-hour $67,500 Actual Cost in March $ 22,390 $ 60,000 $ 8,200 $120, 100 $ 69,200 During March, the company worked 19,000 machine-hours and produced 13,000 units. The company had originally planned to work 21,000 machine-hours during March. Required: Calculate the activity variances for March. 2. Calculato

asked that you review the company's costing system and "do what you can to help us get better control of our manufacturing overhead costs." You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March: Utilities Maintenance Supplies Indirect labor Depreciation Cost Formula $16,000+ $0.19 per machine-hour $38,900 $1.30 per machine-hour $0.48 per machine-hour $94,000+ $1.20 per machine-hour $67,500 Actual Cost in March $ 22,390 $ 60,000 $ 8,200 $120, 100 $ 69,200 During March, the company worked 19,000 machine-hours and produced 13,000 units. The company had originally planned to work 21,000 machine-hours during March. Required: Calculate the activity variances for March. 2. Calculato

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Description: asked that you review the company's costing system and "do what you can to help us get better control of our manufacturingoverhead costs." You find that the company has never used a flexible budget, and you suggest that preparing such a budget would

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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Schoening Corporation is a shipping container refurbishment company that measures its output by the number of containers refurbished. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results of operations for January. Revenue Employee salaries and wages Refurbishing materials Other expenses Fixed Element per Month $ 50,600 $41,200 Variable Element per Actual Total for Container January Refurbished $4,100 $ 1.100 $ 700 $ 158,600 $92,700 $ 27,000 $ 40,800 When the company prepared its planning budget at the beginning of January, it assumed that 40 containers would have been refurbished. However, 38 containers were actually refurbished during January. The activity variance for "Refurbishing materials" for January would have been closest to: $1,000 F $1,400 F $1,000 U $1,400 U
Mary Ellis owns a small manufacturing company and would like to develop more accurate estimates for overhead expenses when making planning decisions. She is pretty sure that overhead is a mixed cost that varies with direct labour-hours but she would like to do a proper analysis to determine the variable and fixed components. She collected the following information for the past 12 months on direct labour-hours incurred and total overhead expenses. Total Overhead Costs $44,000 Month January Direct Labour-Hours 1,500 February 1,680 $ 47,200 March 1,000 $ 48,000 April 2,520 $ 51,200. May 2,700 $ 53,600 June 3,300 $ 56,000 July 3,900 $ 59,200 August 4,500 $ 61,600 September 4,200 $ 60,000 October 2,700 $ 54,400 November 1,800 $49,600 December 3,900 $ 58,400 Required: 1. Using the least-squares regression method, estimate the variable overhead cost per direct labour-hour and the total fixed overhead cost per month. (Round Fixed cost to the nearest whole doller amount and the Variable cost…
The controller of New Wave Sounds Inc. prepared the following product profitability report for management, using activity-based costing methods for allocating both the factory overhead and the marketing expenses. As such, the controller has confidence in the accuracy of this report. Home Theater Wireless Wireless Speakers Speakers Headphones Total $ 1,500,000 (1,050,000) $ 450,000 (600,000) $ (150,000) $ 900,000 (810,000) $ 90,000 (72,000) $ 18,000 $ 3,600,000 (2,580,000) $ 1,020,000 (792,000) $ 228,000 Sales $1,200,000 Cost of goods sold Gross profit (720,000) $ 480,000 (120,000) $ 360,000 Marketing expenses Operating income In addition, the controller interviewed the vice president of marketing, who provided the following insight into the company's three products: The home theater speakers are an older product that is highly recognized in the marketplace. - The wireless speakers are a new product that was just recently launched. - The wireless headphones are a new technology that has…
Activity-Based Costing Slack Corporation has the following predicted indirect costs and cost drivers for the year for the given activity cost pools: Maintenance Materials handling Machine setups Inspections Machine hours Material moves Machine setups Inspection hours Fabrication Department Finishing Department Cost Driver $50,000 30,000 70,000 $40,000 Machine hours 15,000 Material moves 5,000 Machine setups 25,000 Inspection hours $85,000 The following activity predictions were also made for the year. Fabrication Department Finishing Department Direct materials cost Direct labor cost Machine hours (Fabrication) Machine hours (Finishing) Materials moves Machine setups Inspection hours It is assumed that the cost per unit of activity for a given activity does not vary between departments. Slack's president, Charles Slack, is trying to evaluate the company's product mix strategy regardin two of its five product models, ZX300 and SL500. The company has been using a company-wide overhead…
Feeling Better Medical Inc., a manufacturer of disposable medical supplies, prepared the following factory overhead cost budget for the Assembly Department for October of the current year. The company expected to operate the department at 100% of normal capacity of 7,100 hours. Variable costs: Indirect factory wages Power and light Indirect materials $24,140 13,490 10,650 $48,280 Total variable cost Fixed costs: Supervisory salaries $13,060 Depreciation of plant and equipment 33,510 Insurance and property taxes 10,230 Total fixed cost 56,800 Total factory overhead cost $56,800 During October, the department operated at 7,500 standard hours, and the factory overhead costs incurred were indirect factory wages, $25,760; power and light, $13,990; indirect materials, $11,500; supervisory salaries, $13,060; depreciation of plant and equipment, $33,510; and insurance and property taxes, $10,230. Required: Prepare a factory overhead cost variance report for October. To be useful for cost…
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question? 1) For each cost determine whether it is fixed,variable or mixed? Think about the appropriate activity level for each cost:units sold or units produced. 2) prepare a properly formatted cost function for each cost ?
I have a few questions from the last chapter that still don't understand can i get help.
After reading an article about activity-based costing in a trade journal for the furniture industry, Santana Rey decides to analyze overhead cost at Business Solutions. In a recent month, Santana found that setup costs, inspection costs, and utility costs made up most of the company's overhead. Additional information about overhead follows. Activity Set up Inspection Utilities Total Budgeted Cost $ 24,920 The following data pertain to Job 615. $ 2,500 $ 3,300 $ Direct materials. Direct labor Overhead Setups Parts inspected Machine hours 5,400 10,800 $ 41,120 Setup Inspection Utilities Budgeted Activity Usage 28 setups 5,400 parts inspected 5,400 machine hours (MH) 5 setups 590 parts inspected 610 machine hours. Required: 1. Classify each of the three overhead activities as unit level, batch level, product level, or facility level. 2. Assume Business Solutions allocates overhead cost using a plantwide rate based on 5,400 machine hours. Compute total product cost of Job 615. 3. Assume…