Orchid Company has developed the following flexible budget formulas for itsthree overhead items:Overhead ItemMaintenancePowerEquipment leaseVariable Rate per DirectFixed CostLabour Hour$8,000$2.00$2,000$0.40$5,000The company normally produces 10,000 units (each unit requires 0. 10 directlabour hours); however, this year 15,000 units were produced with thefollowing actual costs:Overhead ItemActual Costs$14,000MaintenancePowerEquipment lease3,6005,000Refer to Orchid Company. Prepare an overhead budget for the expectedactivity level of 10,000 units. What is the total budgeted overhead?$12,400$17,400$27,400$139,400A

To prepare the overhead budget for the expected activity level of 10,000 units, we need to calculate…

Answered: Orchid Company has developed the…

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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Swifty Corp. supplies its customers with high-quality canvas tents. These canvas tents sell for $170 each, with the following DM and DL usage and price expectations. Direct materials Direct labor Variable-MOH Fixed-MOH (a) Throughout the year, Swifty used 3,780 DL hours in the process of making 3,500 tents. The company had originally planned to produce and sell 3,200 tents with budgeted fixed-MOH cost of $17,600. Its actual fixed-MOH costs amounted to $17,086 for the year. (b) 10 square yards per unit 1.1 DL hours per unit 1.1 DL hours per unit 1.1 DL hours per unit Your answer is correct. Determine Swifty's fixed-MOH price and volume variances. Also identify whether the company's fixed-MOH costs were under-or overapplied, and by how much. Fixed-MOH price variance Fixed-MOH Fixed-MOH volume variance $ (2) $ (3) @ $6/square yard @ $16/DL hour @ $2.80/DL hour No. Account Titles and Explanation (1) @ $5/DL hour 514 1650 2164 Favorable Record the journal entries to accompany the following…
You have collected the standard cost card for one unit of the ‘Zeus’ which was in operation in the just ended period, details of which follow below: K Materials 7kg at K35.00 245.00 Labour 20 hours at K12.00 240.00 Variable overheads 20 hours at K8.00 160.00 Fixed overheads 20 hours at K15.00 300.00 945.00 Selling price 1,500.00 Profit…
Management at Marvin Limited has provided the following budgeted and actual annual figures for one of its products based on variable costing: Output (production and sales) Sales revenue Direct materials Direct labour Variable overheads Fixed overheads Required: a) b) c) Budget 18,000 units £ Calculate the following: 576,000 (27,000 metres) 132,300 (28,800 hours) 273,600 (28,800 hours) 115,200 8,000 Construct a flexed budget for the actual units made and sold. i. ii. iii. iv. Use your answer to a) above to calculate the sales volume contribution margin variance and interpret this result. Actual 20,200 units £ 828,200 (27,270 metres) 136,350 (40,400 hours) 391,880 (40,400 hours) 193,920 12,150 Sales price variance; Direct materials price and usage variances; Direct labour wage rate and efficiency variances; and Fixed overhead expenditure variance. d) Briefly explain how standard costing and variance analysis support budgetary control within an organisation.
Casey Limited, which manufactures a single product, is considering whether to use marginal or absorption costing to report its budgeted profit in itsmanagement accounts. The following information is available: $/unit Direct materials 2 Direct labour 8 10 Selling price 35 Fixed production overheads are budgeted to be $25,000 per month and are absorbed on an activity level of 10,000 units per month. For the month in question, sales are expected to be 8,000 units althoughproduction units will be 10,000 units. Fixed selling costs of $15,000 per month will incurred and the variable selling costs would be $0.20 per unit. There are no opening Inventory. Required:Prepare the budgeted profit and loss account for a month for Casey Limited using absorption costing. Clearly show the valuation of any Inventory figures.
Use the following information for the Exercises below. (Algo) [The following information applies to the questions displayed below.] Manuel Company predicts it will operate at 80% of its productive capacity. Its overhead allocation base is DLH and its standard amount per allocation base is 0.5 DLH per unit. The company reports the following for this period. Production (in units) Overhead Variable overhead Fixed overhead Total overhead Flexible Budget at 80% Capacity 50,250 Required 1 Required 2 $ 276,375 50, 250 $ 326,625 Exercise 21-18 (Algo) Volume and controllable variances LO P4 Actual Results 44,400 (1) Compute the overhead volume variance. Indicate variance as favorable or unfavorable. (2) Compute the overhead controllable variance. Indicate variance as favorable or unfavorable. Budgeted (flexible) overhead Standard overhead applied Volume variance $ 308,300 Complete this question by entering your answers in the tabs below. Volume Variance Compute the overhead volume variance.…
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Based on predicted production of 24,300 units, a company budgets $320,000 of fixed costs and $461,700 of variable costs. If the company actually produces 19,100 units, what are the flexible budget amounts of fixed and variable costs?
Calculate the total factory overhead rate per unit using direct labor hours as allocation base. The flexible budget coco corp. in different levels of direct labor hours. Direct labor hours 20,0000 30,000 40,000 Variable FOH 40,0000 60,000 80,000 Fixed FOH 10,0000 10,000 10,000 Each product needs 5 direct labor hours and the company expects to produce 2,000 units in 2021. Calculate the total factory overhead rate per unit using units of production as allocation base.
Skooby Dubby Doo Inc. sells 3 products. Budgeted fixed cost for next period is $10,650. Use the following data to be guided: Product Units Selling Price Variable Cost Skooby 16,000 14 9 Dubby 12,000 10 6 Doo 52,000 11 8 How many units of product Dubby must be sold in order for the firm to earn an operating income of $8,520?
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Mcniff Corporation makes a range of products. The company's predetermined overhead rate is $17 per direct labor-hour, which was calculated using the following budgeted data: Variable manufacturing overhead $ 80,000 Fixed manufacturing overhead $ 260,000 Direct labor-hours 20,000 Management is considering a special order for 710 units of product O96S at $65 each. The normal selling price of product O96S is $76 and the unit product cost is determined as follows: Direct materials $ 38.00 Direct labor 17.00 Manufacturing overhead applied 17.00 Unit product cost $ 72.00 If the special order were accepted, normal sales of this and other products would not be affected. The company has ample excess capacity to produce the additional units. Assume that direct labor is a variable cost, variable manufacturing overhead is really driven by direct labor-hours, and total fixed manufacturing overhead would not be affected by the special…

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