Required:Compute the company's activity variances for May. (Hint: Refer to Exhibit 9-6.) EXERCISE 9-7 Flexible Budgets and Activity Variances LO9-1, LO9-2Jake's Roof Repair has provided the following data concerning its costs:Fixed CostCost perRepair-Hourper MonthWages and salariesParts and suppliesEquipment depreciationTruck operating expensesRent$23,200$16.30$8.60$0.40$1.70$1,600$6,400$3,480Administrative expenses.$4,500$0.80For example, wages and salaries should be $23,200 plus $16.30 per repair hour. The companyexpected to work 2,800 repair-hours in May, but actually worked 2,900 repair-hours. The companyexpects its sales to be $44.50 per repair-hour.

In this question, we have to find out activity variance Activity variance is the difference between…

Answered: Required: Compute the company's…

Business

Accounting

Required: Compute the company's activity variances for May. (Hint: Refer to Exhibit 9-6.)

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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1. What raw materials cost would be included in the company’s planning budget for March? 2. What raw materials cost would be included in the company’s flexible budget for March? 3. What is the materials price variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.). Input all amounts as positive values.)
Jake's Roof Repair has provided the following data concerning its costs Cost per Repair Hour $15.00 $ 7.70 $0.50 $ 3.50 $ 0.60 Wages and salaries Parts and supplies Equipeent depreciation Truck operating expenses Rent Administrative expenses Fixed Cost per Month $ 21,000 $2,730 $ 5,709 $ 4,020 $3,050 For example, wages and salaries should be $21,000 plus $15.00 per repair-hour. The company expected to work 2.900 repair-hours in May, but actually worked 2.800 repair-hours. The company expects its sales to be $52.00 per repair-hour Required: Compute the company's activity variances for May (Indicate the effect of each variance by selecting "F" for favorable. "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
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Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,300 pounds of oysters in August. The company's flexible budget for August appears below: Quilcene Oysteria Flexible Budget Actual pounds (q) Revenue ($4.15q) Expenses: Packing supplies ($0.35q) Oyster bed maintenance ($3,100) Wages and salaries ($2,500 + $0.35q) Shipping ($0.60q) Utilities ($1,210) For the Month Ended August 31 Other ($400 + $0.019) Total expenses Net operating income Actual pounds Revenue The actual results for August were as follows: Expenses: Quilcene Oysteria Income Statement For the Month Ended August 31 Packing supplies Oyster bed maintenance Wages and salaries Shipping Utilities Other Total expenses Net operating income 7,300 $ 30,295 2,555 3,100 5,055 4,380 1,210 473 16,773 $ 13,522 7,300 $ 26,600 2,725 2,960 5,465 4,110 1,020 1,093 17,373 $ 9,227
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Required: 1. Prepare a flexible budget performance report for July that includes revenue and spending variances and activity variances. Note: Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Flights Revenue Expenses: Wages and salaries Fuel Airport fees Aircraft depreciation Office expenses 4 Total expense Net operating income Actual Results $ $ 60 16,000 8,228 1,970 2,765 600 428 13,991 2,009 Vulcan Flyovers Flexible Budget Performance Report For the Month Ended July 31 Flexible Budget $ $ 60 21,300 8,260 1,800 2,880 600 260 13,800 7,500 $ $ Planning Budget 58 20,590 8,088 1,740 2,812 580 258 13,478 7,112
1. Prepare a report showing the conpany's activity variances for July. 2. Which of the activity variances should be of concern to management? Explain.
The spending variance for "Other Expenses" for March would have been closest to?
A company that wants to report both spending and efficiency variances for 1 point overhead must compute budget allowances for both the actual amount of activity that occurred and the standard level of activity allowed for the level of output achieved. True O False
You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company's costing system and "do what you can to help us get better control of our manufacturing overhead costs." You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March: Utilities Maintenance Supplies. Indirect labor Depreciation Cost Formula $16,800+ $0.17 per machine-hour $38,600+ $1.90 per machine-hour $0.40 per machine-hour $94,700+ $2.10 per machine-hour $67,700 Actual Cost in March $ 22,850 $ 79,900 $9,800 $ 148, 100 $ 69,400 During March, the company worked 23,000 machine-hours and produced 17,000 units. The company had originally planned to work 25,000 machine-hours during March.…