FLEXIBLE BUDGETS AND PERFORMANCE ANALYSIS, AND STANDARD COSTING Excellent Institute offers executive training programmes. It bases its budgets on two measures of activity (i.e., cost drivers): number of executives and number of programmes. The institute uses the following data in its budgeting: Fixed element per month ($) Variable element per executive ($) Variable element per programme ($) Revenue 0 336 0 Instructor wages 0 0 2000 Office supplies 0 52 30 Admin expenses 47,700 13 29 In January, the institute budgeted for 1,870 executives and 174 programmes. The institute’s income statement showing the actual results for the month appears below: Excellent Institute Income Statement For the month ended January 31 Actual students 1,670 Actual courses 172 Revenue $560,600 Expenses: Instructor wages Office supplies Admin expenses 350,110 93,040 85,728 Total expenses 528,878 Net operating income $31,722 Required: Prepare a flexible budget performance report showing both the institute’s activity variances and revenue and spending variances for July. Label each variance as favourable (F) or unfavourable (U). Type in answers to Question 3. a. (expand the space as needed)
FLEXIBLE BUDGETS AND PERFORMANCE ANALYSIS, AND
- Excellent Institute offers executive training programmes. It bases its budgets on two measures of activity (i.e., cost drivers): number of executives and number of programmes. The institute uses the following data in its budgeting:
|
|
Fixed element per month ($) |
Variable element per executive ($) |
Variable element per programme ($) |
|
Revenue |
0 |
336 |
0 |
|
Instructor wages |
0 |
0 |
2000 |
|
Office supplies |
0 |
52 |
30 |
|
Admin expenses |
47,700 |
13 |
29 |
In January, the institute budgeted for 1,870 executives and 174 programmes. The institute’s income statement showing the actual results for the month appears below:
|
Excellent Institute Income Statement For the month ended January 31 |
|
|
Actual students |
1,670 |
|
Actual courses |
172 |
|
|
|
|
Revenue |
$560,600 |
|
Expenses: Instructor wages Office supplies Admin expenses |
350,110 93,040 85,728 |
|
Total expenses |
528,878 |
|
Net operating income |
$31,722 |
Required:
Prepare a flexible budget performance report showing both the institute’s activity variances and revenue and spending variances for July. Label each variance as favourable (F) or unfavourable (U).
|
Type in answers to Question 3. a. (expand the space as needed)
|
- Fabulous Quality uses a standard cost system. It has established the following standards for one unit of product.
|
|
Standard quantity |
Standard price or rate |
Standard cost |
|
Direct labour |
1.4 hours |
$12.00 per hour |
$16.80 |
|
Direct materials |
5 Kg |
$3.60 per Kg |
$18.00 |
In April, the company purchased 125,000 Kg of direct material at a total cost of $490,000. The total factory wages for April were $364,000, 95 percent of which were for direct labour. The company manufactured 22,000 units of product during April using 106,000 Kg of direct material and 28,000 direct labour-hours.
Required:
Determine the followings: Material price variance, material quantity variance, labour rate variance, and labour efficiency variance. Also, mention ONE possible cause of each variance identified.
|
Type in answers to Question 3. b. (expand the space as needed)
|
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