Jay Banning, CEO and a major stockholder of Banning Incorporated, was unhappy with its operating results for the past year. The company manufactures two environmentally friendly industrial caliber cleaning machines used primarily in automobile repair shops, gas stations, and auto dealerships. The master budget and operating results for the year (000s omitted except for the selling price per unit) follow: Actual Budget T10 T10 $ 133,200 61,800 $ 71,400 10,000 $ 61,400 S40 S40 $ 58,734 27,000 $ 31,734 10,000 $ 106,000 50,000 $ 56,000 10,000 $ 46,000 $ 46,000 25,000 $ 21,000 10,000 $ 11,000 Sales Variable cost Contribution Fixed cost Operating income $ 21,734 Units sold 1,200 1,506 Unit selling price $ 100 $ 40 Required: 1. Compute the contribution margin flexible-budget variance, contribution margin sales volume variance, contribution margin sales quantity variance, and contribution margin sales mix variance for each product and for the firm. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount.)

Jay Banning, CEO and a major stockholder of Banning Incorporated, was unhappy with its operating results for the past year. The company manufactures two environmentally friendly industrial caliber cleaning machines used primarily in automobile repair shops, gas stations, and auto dealerships. The master budget and operating results for the year (000s omitted except for the selling price per unit) follow: Actual Budget T10 T10 $ 133,200 61,800 $ 71,400 10,000 $ 61,400 S40 S40 $ 58,734 27,000 $ 31,734 10,000 $ 106,000 50,000 $ 56,000 10,000 $ 46,000 $ 46,000 25,000 $ 21,000 10,000 $ 11,000 Sales Variable cost Contribution Fixed cost Operating income $ 21,734 Units sold 1,200 1,506 Unit selling price $ 100 $ 40 Required: 1. Compute the contribution margin flexible-budget variance, contribution margin sales volume variance, contribution margin sales quantity variance, and contribution margin sales mix variance for each product and for the firm. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount.)

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter14: Quality And Environmental Cost Management

Section: Chapter Questions

Problem 4CE: Nabors Company had actual quality costs for the year ended June 30, 20x5, as given below. At the...

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Jay Banning, CEO and a major stockholder of Banning Incorporated, was unhappy with its operating results for the past year. The company manufactures two environmentally friendly industrial caliber cleaning machines used primarily in automobile repair shops, gas stations, and auto dealerships. The master budget and operating results for the year (000s omitted except for the selling price per unit) follow: Actual Budget T10 S40 T10 S40 $ 142,800 61,400 $ 81,400 10,000 $ 59,046 18,600 $ 40,446 10,000 $ 30,446 $ 114,000 50,000 $ 54,000 25,000 Sales Variable cost Contribution $ 64,000 29,000 10,000 Fixed cost 10,000 Operating income $ 71,400 $ 54,000 $ 19,000 Units sold 1,200 1,514 Unit selling price $ 100 $ 40 Required: 1. Compute the contribution margin flexible-budget variance, contribution margin sales volume variance, contribution margin sales quantity variance, and contribution margin sales mix variance for each product and for the firm. (Do not round intermediate calculations and…
Al Khoud Training Center (KTC) is an industrial training company operating in Muscat Knowledge Oasis. Following increased competition and customer expectations, KTC has been forced to revisit its operational strategy and its quality standards. The following budgeted data for 2022 are available: Number of Trainees 6,000 Operating Income OMR45,000 Budgeted Variable Cost per Trainee Trainee's Support Service Training Materials Foods Miscellaneous Products & Services OMR15 Budgeted Fixed Cost per Training 16,000 5,000 OMR26 Facilities OMR12 Salaries OMR22 Based on the customer survey it conducted, KTC has learned that several improvements to its products and services are required. The improvements would provide the following impacts: Increase in the Number of Trainees Increase in the Total Variable Costs Increase in the Total Fixed Costs 70% 65% 50% You are required to: (0) Calculate the budgeted revenue per trainee based on the available data. (i) Assuming that budgeted revenue per…
(a) Al Khoud Training Center (KTC) is an industrial training company operating in Muscat Knowledge Oasis. Following increased competition and customer expectations, KTC has been forced to revisit its operational strategy and its quality standards. The following budgeted data for 2022 are available: Number of Trainees 5,500 Operating Income OMR24,000 Budgeted Variable Cost per Trainee Trainee's Support Service Training Materials Foods Budgeted Fixed Cost per Training 14,800 13,000 OMR16 Facilities OMR21 Salaries OMR20 OMR10 Miscellaneous Products & Services Based on the customer survey it conducted, KTC has learned that several improvements to its products and services are required. The improvements would provide the following impacts: Increase in the Number of Trainees 30% Increase in the Total Variable Costs 25% Increase in the Total Fixed Costs 25% You are required to: (1) Calculate the budgeted revenue per trainee based on the available data. (i) Assuming that budgeted revenue per…
Venus Creations sells window treatments (shades, blinds, and awnings) to both commercial and residential customers. The following information relates to its budgeted operations for the current year. Commercial Residential Revenues $300,700 $483,000 Direct materials costs $29,500 $50,500 Direct labor costs 100,400 289,500 Overhead costs 90,900 220,800 150,000 490,000 Operating income (loss) $79,900 $(7,000) The controller, Peggy Kingman, is concerned about the residential product line. She cannot understand why this line is not more profitable given that the installations of window coverings are less complex for residential customers. In addition, the residential client base resides in close proximity to the company office, so travel costs are not as expensive on a per client visit for residential customers. As a result, she has decided to take a closer look at the overhead costs assigned to…
Wasson's Classic Cars restores classic automobiles to showroom status. Budgeted data for the current year are as follows. Restorers' wages and fringe benefits Purchasing agent's salary and fringe benefits Administrative salaries and fringe benefits Other overhead costs Total budgeted costs (a) Time Charges $200,000 40,000 10,000 $250,000 Profit margin on labor $ The company anticipated that the restorers would work a total of 10,000 hours this year. Expected parts and materials were $1,200,000 Material Loading Charges In late January, the company experienced a fire in its facilities that destroyed most of the accounting records. The accountant remembers that the hourly labor rate was $68 and that the material loading charge was 82%. $64,000 20,000 72,000 $156,000 Determine the profit margin per hour on labor. (Round intermediate calculations to 2 decimal places, eg. 10.25 and final answer to O decimal places, e.g. 10) per hour
The Puyer Corporation makes and sells only one product called a Deb. The company is in the process of preparing its Selling and Administrative Expense Budget for next year. The following budget data are available: Variable Monthly Fixed Cost Cost Per Deb Sold Sales commissions Shipping Advertising Executive salaries Depreciation on office equipment $1.10 $1.60 $ 52,000 $62,000 $ 22,000 $ 42,000 $0.40 Other All of these expenses (except depreciation) are paid in cash in the month they are incurred. If the company has budgeted to sell 17,000 Debs in February. then the total budgeted fixed selling and administrative expenses for February is: Multiple Cholce O $156,000 $178,000 $126,000 $136,000
1. Zelmer Company manufactures tablecloths. Sales have grown rapidly over the past 2 years. As a result, the president has installed a budgetary control system for 2020. The following data were used in developing the master manufacturing overhead budget for the Ironing Department, which is based on an activity index of direct labor hours. Variable costs Rate per direct labor hour Annual fixed costs Indirect labor $ 0.42 Supervision $ 42600 Indirect material $ 0.50 depreciation $ 17280 Factory utilities $ 0.33 insurance $ 14640 Factory repairs $ 0.23 rent $ 30600 The master overhead budget was prepared on the expectation that 481,600 direct labor hours will be worked during the year. In June, 38,400 direct labor hours were worked. At that level of activity, actual costs were as shown below. Variable—per direct labor hour: indirect labor $0.46, indirect materials $0.48, factory utilities $0.37, and…
Taylor’s Classic Cars restores classic automobiles to showroom status. Budgeted data for the current year are: Material Time Loading Charges Charges Restorers’ wages and fringe benefits $270,000 Puchasing agent’s salary and fringe benefits $ 67,500 Administrative salaries and fringe benefits 60,000 22,500 Other overhead costs 20,000 75,600 Total budgeted costs $350,000 $165,600 The company anticipated that the restorers would work a total of 10,000 hours this year. Expected parts and materials were $1,200,000. In late January, the company experienced a fire in its facilities that destroyed most of the accounting records. The accountant remembers that the hourly labor rate was $60 and that the material loading charge was 83.80%. Instructions Determine the profit margin per hour on labor. Determine the profit margin on materials. Determine the total price of labor and materials on a job that was completed after…
The Puyer Corporation makes and sells only one product called a Deb. The company is in the process of preparing its Selling and Administrative Expense Budget for next year. The following budget data are available: Monthly Fixed Cost Variable Cost Per Deb Sold Sales commissions $ 1.05 Shipping $ 1.55 Advertising $ 51,500 $ 0.35 Executive salaries $ 61,500 Depreciation on office equipment $ 21,500 Other $ 41,500 All of these expenses (except depreciation) are paid in cash in the month they are incurred. If the company has budgeted to sell 16,500 Debs in February, then the total budgeted fixed selling and administrative expenses for February is:
Venus Creations sells window treatments (shades, blinds, and awnings) to both commercial and residential customers. The following information relates to its budgeted operations for the current year. Commercial Residential Revenues $357,500 $460,500 Direct materials costs $30,000 $50,000 Direct labor costs 140,000 260,000 Overhead costs 97,500 267,500 170,500 480,500 Operating income (loss) $90,000 $(20,000) The controller, Peggy Kingman, is concerned about the residential product line. She cannot understand why this line is not more profitable given that the installations of window coverings are less complex for residential customers. In addition, the residential client base resides in close proximity to the company office, so travel costs are not as expensive on a per client visit for residential customers. As a result, she has decided to take a closer look at the overhead costs assigned to the two product lines to determine whether a more accurate product costing model can be…
Riverbed's Classic Cars restores classic automobiles to showroom status. Budgeted data for the current year are as follows Restorers' wages and fringe benefits Purchasing agent's salary and fringe benefits Administrative salaries and fringe benefits Other overhead costs Total budgeted costs (a) * Your answer is incorrect. Profit margin on labor $ esc ! The company anticipated that the restorers would work a total of 12,720 hours this year. Expected parts and materials were $1,335,600. 1 In late January, the company experienced a fire in its facilities that destroyed most of the accounting records. The accountant remembers that the hourly labor rate was $70.00 and that the material loading charge was 83.00%. Q A # Determine the profit margin per hour on labor. (Round intermediate calculations to 2 decimal places, e.g. 10.25 and final answer to 0 decimal places, e.g. 10.) Z 2 W S # = 3 Time Charges $292,560 X 20 E 63,600 $381,600 25,440 70 D $ 4 per hour 888 000 R Material Loading…
Wildhorse's Classic Cars restores classic automobiles to showroom status. Budgeted data for the current year are as follows: Restorers' wages and benefits Purchasing agent's salary and benefits Administrative salaries and benefits Other overhead costs Total budgeted costs (a1) Your answer is correct. Profit margin (a2) Time Charges Material Loading Charges eTextbook and Media $329,400 The company anticipated that the restorers would work a total of 10,000 hours this year. Expected parts and materials were $1,200,000. $ 73,200 24,400 In late January, the company experienced a fire in its facilities that destroyed most of the accounting records. The accountant remembers that the hourly labor rate was $60.00 and that the material loading charge was 83.80%. Profit margin $427,000 Determine the profit margin per hour on labor. (Round answer to 2 decimal places, e.g. 15.25.) $82,350 27,450 17.30 219,240 $329,040 % Determine the profit margin on materials. (Round answer to 2 decimal places,…