Units Sales Variable costs Direct labor Direct Material Variable Manufacturing Total variable costs Contribution Margin Fixed costs Manufacturing Selling & Admin Total fixed costs Operating Revenue Units Sales Variable costs Direct labor Direct Material Variable Manufacturing Total variable costs Contribution Margin Fixed costs Manufacturing Selling & Admin Total fixed costs Operating Income Master Budget 17,500 $259,000 $45,000 $25,000 $125,000 $195,000 $64,000 $20,250 $13,000 $33,250 $30,750 Budget Formula $2.57 $1.43 $7.14 Actual Amounts 17,000 $255,000 $38,000 $25,500 $129,500 $193,000 $62,000 $20,250 $13,000 $33,250 $28,750 Flexible Budget 17,000 $255,000 $43,714 $24,286 Variance 500 4,000 $20,250 $13,000 7,000 500 $33,250 $32,321 4,500 2,000 2,000 2,000 $38,000 $25,500 $121,429 $129,500 Actual 17,000 $255,000 $189,429 $193,000 $65,571 $62,000 $20,250 $13,000 $33,250 $28,750 Variance Fav/Unfav 5,714 1,214 8,071 3,571 3,571 3,571 % Diff Investigate?

Units Sales Variable costs Direct labor Direct Material Variable Manufacturing Total variable costs Contribution Margin Fixed costs Manufacturing Selling & Admin Total fixed costs Operating Revenue Units Sales Variable costs Direct labor Direct Material Variable Manufacturing Total variable costs Contribution Margin Fixed costs Manufacturing Selling & Admin Total fixed costs Operating Income Master Budget 17,500 $259,000 $45,000 $25,000 $125,000 $195,000 $64,000 $20,250 $13,000 $33,250 $30,750 Budget Formula $2.57 $1.43 $7.14 Actual Amounts 17,000 $255,000 $38,000 $25,500 $129,500 $193,000 $62,000 $20,250 $13,000 $33,250 $28,750 Flexible Budget 17,000 $255,000 $43,714 $24,286 Variance 500 4,000 $20,250 $13,000 7,000 500 $33,250 $32,321 4,500 2,000 2,000 2,000 $38,000 $25,500 $121,429 $129,500 Actual 17,000 $255,000 $189,429 $193,000 $65,571 $62,000 $20,250 $13,000 $33,250 $28,750 Variance Fav/Unfav 5,714 1,214 8,071 3,571 3,571 3,571 % Diff Investigate?

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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Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

Units
Sales
Variable costs
Direct labor
Direct Material
Variable Manufacturing
Total variable costs
Contribution Margin
Fixed costs
Manufacturing
Selling & Admin
Total fixed costs
Operating Revenue
Units
Sales
Variable costs
Direct labor
Direct Material
Variable Manufacturing
Total variable costs
Contribution Margin
Fixed costs
Manufacturing
Selling & Admin
Total fixed costs
Operating Income
Master Budget
17,500
$259,000
$45,000
$25,000
$125,000
$195,000
$64,000
$20,250
$13,000
$33,250
$30,750
Budget Formula
$2.57
$1.43
$7.14
Actual Amounts.
17,000
$255,000
$38,000
$25,500
$129,500
$193,000
$62,000
$20,250
$13,000
$33,250
$28,750
Flexible Budget
17,000
$255,000
Variance
500
4,000
$20,250
$13,000
$33,250
$32,321
7,000
500
4,500
2,000
2,000
2,000
Actual Variance Fav/Unfav
17,000
$255,000
$43,714
$38,000
$24,286
$25,500
$121,429 $129,500
$189,429 $193,000
$65,571
$62,000
$20,250
$13,000
$33,250
$28,750
5,714
1,214
8,071
3,571
3,571
3,571
% Diff
Investigate?

✓ Details Using Management by Exception, use a 12% benchmark to
determine which variances must be investigated. \table[[, Master
Budget, Actual Amounts,Variance], [Units, 17, 500, 17,000, 500

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