Principles of Cost Accounting 17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Edward J. Vanderbeck, Maria R. Mitchell
1 Introduction To Cost Accounting 2 Accounting For Materials 3 Accounting For Labor 4 Accounting For Factory Overhead 5 Process Cost Accounting—general Procedures 6 Process Cost Accounting—additional Procedures; Accounting For Joint Products And By-products 7 The Master Budget And Flexible Budgeting 8 Standard Cost Accounting—materials, Labor, And Factory Overhead 9 Cost Accounting For Service Businesses, The Balanced Scorecard, And Quality Costs 10 Cost Analysis For Management Decision Making Chapter7: The Master Budget And Flexible Budgeting
Chapter Questions Section: Chapter Questions
Problem 1Q Problem 2Q Problem 3Q Problem 4Q Problem 5Q: Explain zero-based budgeting and how it differs from the traditional approach to preparing next... Problem 6Q Problem 7Q: Which operating budget must be prepared before the others? Why? Problem 8Q Problem 9Q: Why is it important to have front-line managers participate in the budgeting process? Problem 10Q: If the sales forecast estimates that 50,000 units of product will be sold during the following year,... Problem 11Q: What are the advantages and disadvantages of each of the following for a company that has greatly... Problem 12Q: What three operating budgets can be prepared subsequent to preparation of the production budget? Problem 13Q Problem 14Q: What are the three budgets that are needed in order to prepare the budgeted income statement? Problem 15Q: Why might Web-based budgeting be more useful than using spreadsheets to budget? Problem 16Q: What is a flexible budget? Problem 17Q: Why is a flexible budget better than a master budget for comparing actual results to budgeted... Problem 18Q: Why is it important to distinguish between variable costs and fixed costs for budgeting purposes? Problem 19Q: Why is the concept of relevant range important when preparing a flexible budget? Problem 20Q: In comparing actual sales revenue to flexible budget sales revenue, would it be possible to have a... Problem 21Q: How would you define the following? a. Theoretical capacity b. Practical capacity c. Normal capacity Problem 22Q: Is it possible for a factory to operate at more than 100% of normal capacity? Problem 23Q: If a factory operates at 100% of capacity one month, 90% of capacity the next month, and 105% of... Problem 24Q: How is the standard cost per unit for factory overhead determined? Problem 25Q: When allocating service department costs to production departments, why is the standard cost that... Problem 1E: The sales department of Macro Manufacturing Co. has forecast sales for its single product to be... Problem 2E: The sales department of F. Pollard Manufacturing Co. has forecast sales in March to be 20,000 units.... Problem 3E: Barnes Manufacturing Co. forecast October sales to be 45,000 units. Additional information follows:... Problem 4E: Prepare a cost of goods sold budget for the Crest Hills Manufacturing Co. for the year ended... Problem 5E: Prepare a cost of goods sold budget for MacLaren Manufacturing Inc. for the year ended December 31,... Problem 6E: Roman Inc. has the following totals from its operating budgets: Prepare a budgeted income statement... Problem 7E: Starburst Inc. has the following items and amounts as part of its master budget at the 10,000-unit... Problem 8E: Using the following per-unit and total amounts, prepare a flexible budget at the 14,000-, 15,000-,... Problem 9E: Cortez Manufacturing, Inc. has the following flexible budget formulas and amounts: Actual results... Problem 10E Problem 11E Problem 12E Problem 13E Problem 14E: Calculating factory overhead The normal capacity of a factory is 10,000 units per month. Cost and... Problem 1P: The Sales Department of Minimus Inc. has forecast sales for May 2016 to be 40,000 units. Additional... Problem 2P: Sales, production, direct materials, direct labor, and factory overhead budgets King Tire Co.s... Problem 3P: Budgeted selling and administrative expenses for King Tire Co. In P7-2 for the year ended December... Problem 4P Problem 5P: Selling and administrative expense budget and budgeted income statement Budgeted selling and... Problem 6P: Preparing a flexible budget Use the information in Figure 7-12 of the chapter. Required: Prepare... Problem 7P: Preparing a performance report Use the flexible budget prepared in P7-6 for the 31,000-unit level... Problem 8P: Preparing a performance report Use the flexible budget prepared in P7-6 for the 29,000-unit level of... Problem 9P: Flexible budget for factory overhead Presented below are the monthly factory overhead cost budget... Problem 10P Problem 11P: Overhead application rate Creole Manufacturing Inc. uses a job order cost system and standard costs.... Problem 12P: Overhead application rate Roll Tide Manufacturing Inc. uses a job order cost system and standard... Problem 1MC: Flexible budgeting, performance measurement, and ethics Montevideo Manufacturing, Inc. produces a... Problem 7P: Preparing a performance report Use the flexible budget prepared in P7-6 for the 31,000-unit level...
Problem 14-52 (Algo) Master Budgets; Flexible Budgets; Operating Income Variance Analysis [LO 14-1, 14-2, 14-3, 14-6]
Required:
1. Complete the missing parts of the following profit report for December.
2. Based on your completed profit report, determine the dollar amount, and label (Favorable or Unfavorable) each of the following variances for December:
a. Total master budget variance .
b. Total flexible budget variance.
c. Sales volume variance, in terms of operating income.
d. Sales volume variance, in terms of contribution margin.
e. Selling price variance.
Transcribed Image Text: Flexible
Actual Results
Flexible-Budget Variances
Sales Volume Variances
Master Budget
Budget
Unit sales
120,000
120,000
110,000
Sales
$
600,000
$
550,000
Variable costs
456,000
330,000
Contribution margin
$
144,000
$
220,000
Fixed costs
80,000
95,000
Operating income
$
64,000
$
125,000
Definition Definition Measure used to estimate the difference between the budgeted and annual proportion for a specific accounting year. A favorable budget variance refers to positive variances or gains, while unfavorable or negative variances refer to a shortfall in the budget. A budget variance is indicative of the instances where the actual costs incurred are higher or lower than the estimated costs.
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