Johnson Electrical produces industrial ventilation fans. The company plans to manufacture 66,000 fans evenly over the next quarter at the following costs: direct material, $1,584,000; direct labor, $330,000; variable production overhead, $458,700; and fixed production overhead, $951,000. The $951,000 amount includes $69,000 of straight-line depreciation and $129,000 of supervisory salaries. Shortly after the conclusion of the quarter's first month, Johnson reported the following costs: Direct material Direct labor $ 448,900 104,500 159,000 Variable production overhead 23,000 44,700 245,000 $ 1,025,100 Depreciation Supervisory salaries. Other fixed production overhead Total Dave Kellerman and his crews turned out 18,000 fans during the month-a remarkable feat given that the firm's manufacturing plant was closed for several days because of storm damage and flooding. Kellerman was especially pleased with the fact that overall financial performance for the period was favorable when compared with the budget. His pleasure, however, was very short-lived, as Johnson's general manager issued a stern warning that performance must improve, and improve quickly, if Kellerman had any hopes of keeping his job.

Johnson Electrical produces industrial ventilation fans. The company plans to manufacture 66,000 fans evenly over the next quarter at the following costs: direct material, $1,584,000; direct labor, $330,000; variable production overhead, $458,700; and fixed production overhead, $951,000. The $951,000 amount includes $69,000 of straight-line depreciation and $129,000 of supervisory salaries. Shortly after the conclusion of the quarter's first month, Johnson reported the following costs: Direct material Direct labor $ 448,900 104,500 159,000 Variable production overhead 23,000 44,700 245,000 $ 1,025,100 Depreciation Supervisory salaries. Other fixed production overhead Total Dave Kellerman and his crews turned out 18,000 fans during the month-a remarkable feat given that the firm's manufacturing plant was closed for several days because of storm damage and flooding. Kellerman was especially pleased with the fact that overall financial performance for the period was favorable when compared with the budget. His pleasure, however, was very short-lived, as Johnson's general manager issued a stern warning that performance must improve, and improve quickly, if Kellerman had any hopes of keeping his job.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Analyze the variances from the flexible budget and identify issues that management should be concern about. You only need to highlight bariances that are a concern
What is the measured mile approach used for?a. Calculate budget spentb. Measure office overheadc. Calculate loss of productivityd. Measure unit costs on site
Indicate whether the item below is used as key performance indicators for the areas of (A) Financial, (B) Customer, (C) Internal Process, or (D) Learning and Growth performance. Choose the one best choice. Quantity variance on a cost report *(A) Financial(B) Customer(C) Internal Process(D) Learning and Growth performance.
1. If a company uses participative budgeting, which group should prepare the initial set of budget dollar amounts? a. Budget committee b. Operating department managers c. Top management d. Accounting department
Recommend to management an AIS system diagram presenting the Budget Profit Planning Process using the 6-level planning. In the end, part of the diagram integrates the mathematical models or formulas in determining budgeted operating profit.
Regarding Budgets, which of the following statements is true? a. A budget is a business plan for the short term. O b. A periodic budget is prepared for a particular period of time. O c. Budgets are based on forecasts. However, the performance of a manager should be compared to a target that reflects the actual environment. O d. All the answers are true.
Please describe the master budget for a manufacturing firm, which budget is prepared first, and how that budget is used to prepare the next budget(s). Please provide three different items out of any of the budgets and explain how an error in one could impact other budgets that come later.
Management Accounting Question (Qualitative Short Answer) a. Why is the sales forecast the starting point in budgeting? b. What is a perpetual budget? c. Which is a better basis for evaluating actual results: budgeted performance or past performance? Why? d. The materials price variance can be computed at what two different points in time? Which point is better and why? e. What effect, if any, would you expect purchasing poor-quality materials to have on direct labor variances? f. Distinguish between ideal and practical standards. g. Costs associated with the quality of conformance can be broken down into four broad groups. What are these four groups and how do they differ? h. What is likely the most effective way to reduce a company's total quality costs? i. What are the three main uses of quality cost reports?
Can you please answer those 2 questions and provide appropriate answers? thank you for your answers. 1. Flexible budgets are used during which stage of the management process? * Planning Organizing Implementing Controlling Evaluation 2. What kind of variance results from a difference between the planning budget and the flexible budget ? * Spending Activity Pre-determined Evaluation none of the above
How do managers use budgets to control business activities?a) Match the concept (by number) to the correct terminology. 1. Static Budget2. Budget Performance Report3. Variance4. Static Budget Variance5. Flexible Budget6. Flexible Budget Variance7. Sales Volume Variance______ A budget prepared for various levels of sales volume.______ The difference between actual results and the expected results in the flexible budget for the actual units sold. ______ The difference between the expected results in the flexible budget for the actual units soldand the static budget. _____ The difference between actual results and the expected results in the static budget. _____ A report that summarizes the actual results, budgeted amounts, and the differences. _____ A budget prepared for only one level of sales volume. _____ The difference between an actual amount and the budgeted amount; labeled as favorable if it increases operating income and unfavorable if it decreases operating income. In…
The traditional line-item budget results in which of the following benefits? Appropriations are flexible to allow for the achievement of desired outcomes. Accountability and responsibility are easily assigned. The long timeframe allows for decision-making and planning. Costs of defined activities are identified.