lexible budgeting and variance analysis I'm really Cold Coat Company makes women's and men's coals. Both products require filler and lining material. The following planning information has been made available: Standard Amount per Unit Women's Coats Men's Coats Standard Price per unit Filler 4.0lb 5.2lb $2.00 per lb Linear 7.0yds 9.4yds 8.00 per yd. Standard labor time 0.40hr. 0.50hr Women s coats Men's coats Planned Production 5.000 units 6,200 units Standard labor rate S14.00 per hr, $13.00 per hr. I am Really Cold Coal Company does not expect there to be any beginning or ending inventories of filler and lining material. At the end of the budget year. I'm Really Cold Coal Company experienced the following actual results: Women's coat Men's Coats Actual Production 4.400 5,800 Actual Price per unit Actual Quantatity Purchased and Used Filler $1.90 per lb 48.000 Liner 8.20 per yd. 85,100 Actual Labor Rate Actual Labor Hours Used Women's Coats $14.10 Per hr. 1.825 Men's Coats 13.30 Per hr 2,800 The expected begining inventory and desired ending inventory were realized. Instructions 1. Prepare the following variance analyses for both coats and the total, based on the actual results and production levels at the end of the budget year: a. Direct materials price, quantity and total variance analyses for both coats and the total, based on the actual results and production levels at the end of the budget year: a. Direct materials price quantity and totoal variance b. Direct labor rate, time and total variance 2. Why are the standard amount in part (1) based on the actual production at the end of the year instead of the planned production at the beginning of the year.

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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lexible budgeting and variance analysis

I'm really Cold Coat Company makes women's and men's coals. Both products require filler and lining material. The following planning information has been made available:

Standard Amount per Unit

	Women's Coats	Men's Coats	Standard Price per unit
Filler	4.0lb	5.2lb	$2.00 per lb
Linear	7.0yds	9.4yds	8.00 per yd.

Standard labor time

0.40hr.

0.50hr

	Women s coats	Men's coats
Planned Production	5.000 units	6,200 units
Standard labor rate	S14.00 per hr,	$13.00 per hr.

I am Really Cold Coal Company does not expect there to be any beginning or ending inventories of filler and lining material. At the end of the budget year. I'm Really Cold Coal Company experienced the following actual results:

	Women's coat	Men's Coats
Actual Production	4.400	5,800
	Actual Price per unit	Actual Quantatity Purchased and Used
Filler	$1.90 per lb	48.000
Liner	8.20 per yd.	85,100
	Actual Labor Rate	Actual Labor Hours Used
Women's Coats	$14.10 Per hr.	1.825
Men's Coats	13.30 Per hr	2,800

The expected begining inventory and desired ending inventory were realized.

Instructions

1. Prepare the following variance analyses for both coats and the total, based on the actual results and production levels at the end of the budget year:

a. Direct materials price, quantity and total variance analyses for both coats and the total, based on the actual results and production levels at the end of the budget year:

a. Direct materials price quantity and totoal variance

b. Direct labor rate, time and total variance

2. Why are the standard amount in part (1) based on the actual production at the end of the year instead of the planned production at the beginning of the year.

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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