EXERCISESExercise 1Jenner Company developed its annual manufacturing overhead budget for its master budget for2008 as follows:Expected annual operating capacityVariable overhead costs120,000 Direct Labor HoursIndirect labonIndirect materials$420,00090,00030,000_540,000Factory suppliesTotal variableFixed overhead costsDepreciationSupervisionProperty taxesTotal fixed180,000120,00096,000396,000$936,000Total costsThe relevant range for monthly activity is expected to be between 8,000 and 12,000 direct laborhours.InstructionsPrepare a flexible budget for a monthly activity level of 8,000 and 9,000 direct labor hours.Exercise 2Fagan Company uses a flexible budget for manufacturing overhead based on machine hours.Variable manufacturing overhead costs per machine hour are as follows:Indirect labor$5.00Indirect materialsMaintenanceUtilities2.505030Fixed overhead costs per month are:SupervisionInsurance$600200Property taxesDepreciation300900The company believes it will normally operate in a range of 2,000 to 4,000 machine hours permonth.InstructionsPrepare a flexible manufacturing overhead budget for the expected range of activity, usingincrements of 1,000 machine hours.Exercise 3Molle Company uses flexible budgets to control its selling expenses. Monthly sales are expectedto be from $200,000 to $240,000. Variable costs and their percentage relationships to sales are:Sales commissions6%4%AdvertisingTravelingDelivery5%1%Fixed selling expenses consist of sales salaries $40,000 and depreciation on delivery equipment$10,000.InstructionsPrepare aflexible budget for increments of $20,000 of sales within the relevant range.Exercise 4

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Jenner Company developed its annual manufacturing overhead budget for its master budget for 2008 as follows: Expected annual operating capacity Variable overhead costs 120,000 Direct Labor Hours Indirect labor Indirect materials $420,000 90,000 30,000 540,000 Factory supplies Total variable Fixed overhead costs Depreciation Supervision Property taxes 180,000 120,000 96,000 396,000 $936,000 Total fixed Total costs The relevant range for monthly activity is expected to be between 8,000 and 12,000 direct labor hours. Instructions Prepare a flexible budget for a monthly activity level of 8,000 and 9,000 direct labor hours.

Jenner Company developed its annual manufacturing overhead budget for its master budget for 2008 as follows: Expected annual operating capacity Variable overhead costs 120,000 Direct Labor Hours Indirect labor Indirect materials $420,000 90,000 30,000 540,000 Factory supplies Total variable Fixed overhead costs Depreciation Supervision Property taxes 180,000 120,000 96,000 396,000 $936,000 Total fixed Total costs The relevant range for monthly activity is expected to be between 8,000 and 12,000 direct labor hours. Instructions Prepare a flexible budget for a monthly activity level of 8,000 and 9,000 direct labor hours.

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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The manufacturing overhead budget at Foshay Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 5,800 direct labor-hours will be required in May. The variable overhead rate is $9.10 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $104,400 per month, which includes depreciation of $8,120. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month. What should be the predetermined overhead rate for May?
The direct labor budget of Yuvwell Corporation for the upcoming fiscal year contains the following details concerning budgeted direct labor-hours: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Budgeted direct labor-hours 9,000 8,700 9,000 8,400 The company uses direct labor-hours as its overhead allocation base. The variable portion of its predetermined manufacturing overhead rate is $3.25 per direct labor-hour and its total fixed manufacturing overhead is $58,000 per quarter. The only noncash item included in fixed manufacturing overhead is depreciation, which is $14,500 per quarter. Required: Prepare the company’s manufacturing overhead budget for the upcoming fiscal year. Compute the company’s predetermined overhead rate (including both variable and fixed manufacturing overhead) for the upcoming fiscal year.
Phoenix Company reports the following fixed budget. It is based on an expected production and sales volume of 15,400 units. Sales Costa PHOENIX COMPANY Fixed Budget For Year Ended December 31 Direct materials Direct labor Sales staff commissions Depreciation-Machinery Supervisory salaries Shipping Sales staff salaries (fixed annual amount) Administrative salaries Depreciation-office equipment Income $ 3,234,000 1,001,000 246,400 46,200 295,000 198,000 231,000 251,000 610,700 193,000 $ 161,700
The budgeted income statement presented below is for Burkett Corporation for the coming fiscal year. Compute the number of units that must be sold in order to achieve a target income of $130,000. Sales (50,000 units) $1,000,000 Costs: Direct materials $ 270,000 Direct labor 240,000 Fixed factory overhead 100,000 Variable factory overhead 150,000 Fixed marketing costs 110,000 Variable marketing costs 50,000 Income 920,000 $ 80,000 O a. 53,165. O b. 81,250. Oc 36,207. O d. 50,000. Oe. 58,621.
Ellington, SRL is developing their manufacturing overhead budget for February, which is based on budgeted direct labor hours. The variable overhead rate is $16.40 per direct labor hour and 7,900 direct labor hours are budgeted for February. Fixed manufacturing overhead is budgeted at $67,000. All overhead costs are current cash flows except for $10,720 of depreciation. What should the manufacturing overhead budget indicate for cash disbursements for manufacturing overhead for the month of February?
The master budget at Cherrylawn Corporation at the beginning of the year was based on sales of 279,000 units with revenues of $3,348,000. Total variable costs were budgeted at $1,953,000 and fixed costs at $966,000. During the period, actual production and actual sales were 255,800 units. The actual revenues were $3,446,500. Actual variable costs were $6.10 per unit. Actual fixed costs were $996,000. Required: Prepare a profit variance analysis. Note: Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. Sales revenue Less: Variable costs Contribution margin Less: Fixed costs Operating profits $ $ Actual 0 0 Manufacturing Variances Cherrylawn Corporation Profit Variance Analysis Sales Price Variance Flexible Budget $ $ 0 Sales Activity Variance Master Budget $ $ 0 0