Budgeted and actual costs for the production process for 2017 were as follows: Static-Budget Amounts Actual Results Number of shirts produced Average number of shirts per setup Hours to set up machines Direct variable cost per setup-hour Total fixed setup overhead costs 125,000 114,000 100 95 5.20 30 32 $56,250 $56,000 Required 1. What is the static budget number of setups for 2017? 2. What is the flexible-budget number of setups for 2017? 3. What is the actual number of setups in 2017? 4. Assuming fixed setup overhead costs are allocated using setup-hours, what is the predetermined fixed setup overhead allocation rate? 5. Does Saluki's charge of $175 cover the budgeted direct variable cost of an order? The budgeted total cost? 6. For direct variable setup costs, compute the price and efficiency variances. 7. For fixed setup overhead costs, compute the spending and the production-volume variances. 8. What qualitative factors should Saluki consider before accepting or rejecting a special order?
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Activity-based costing, batch-level
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