Total variable costs have a direct relationship with the activity base. It increases or decreases in approximate proportion to increase or decrease in the activity base respectively. Total fixed costs do not change with the change in activity base provided that activities are performed within the relevant range. Fixed costs are period costs such as rent, interest on loans, and depreciation. These costs have to be paid whether production occurs or not. That is why fixed costs remain the same at all levels of production. : The Medical Services Department charges the Cutting Department, Milling Department, and Assembly Department.

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Answer 1

Question

Chapter 11, Problem 15E

1.

To determine

Total variable costs have a direct relationship with the activity base. It increases or decreases in approximate proportion to increase or decrease in the activity base respectively.

Total fixed costs do not change with the change in activity base provided that activities are performed within the relevant range. Fixed costs are period costs such as rent, interest on loans, and depreciation. These costs have to be paid whether production occurs or not. That is why fixed costs remain the same at all levels of production.

:

The Medical Services Department charges the Cutting Department, Milling Department, and Assembly Department.

2.

To determine

Spending variance shows the relationship between the budgeted cost and the actual cost incurred. If the budgeted cost is more than the actual cost incurred, then it is termed a favorable spending variance and vice versa.

:

The costs that should be treated as a spending variance and not charged to the operating departments.

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QUESTION 5 The following budgeted profit statement has been prepared using absorption costing principles.A company manufactures and sells a single product which has the following cost and sellingprice structure: P/unit P/unit Selling price P120 Direct material 22 Direct labour 36 Variable overhead 14 Fixed overhead 12 P84 Profit per unit P36 The fixed overhead absorption rate is based on the normal capacity of 2,000 units per month.Assume that the same amount is spent each month on fixed overheads.Budgeted sales for next month are 2,200 units.You are required to calculate:a. The breakeven point, in sales units per month. b. The margin of safety for the next month. c. The budgeted profit for the next month. d. The sales required to achieve a profit of P96,000.

Answer 2

Question

Chapter 11, Problem 15E

1.

To determine

Total variable costs have a direct relationship with the activity base. It increases or decreases in approximate proportion to increase or decrease in the activity base respectively.

Total fixed costs do not change with the change in activity base provided that activities are performed within the relevant range. Fixed costs are period costs such as rent, interest on loans, and depreciation. These costs have to be paid whether production occurs or not. That is why fixed costs remain the same at all levels of production.

:

The Medical Services Department charges the Cutting Department, Milling Department, and Assembly Department.

2.

To determine

Spending variance shows the relationship between the budgeted cost and the actual cost incurred. If the budgeted cost is more than the actual cost incurred, then it is termed a favorable spending variance and vice versa.

:

The costs that should be treated as a spending variance and not charged to the operating departments.

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Answer 3

Question

Chapter 11, Problem 15E

1.

To determine

Total variable costs have a direct relationship with the activity base. It increases or decreases in approximate proportion to increase or decrease in the activity base respectively.

Total fixed costs do not change with the change in activity base provided that activities are performed within the relevant range. Fixed costs are period costs such as rent, interest on loans, and depreciation. These costs have to be paid whether production occurs or not. That is why fixed costs remain the same at all levels of production.

:

The Medical Services Department charges the Cutting Department, Milling Department, and Assembly Department.

2.

To determine

Spending variance shows the relationship between the budgeted cost and the actual cost incurred. If the budgeted cost is more than the actual cost incurred, then it is termed a favorable spending variance and vice versa.

:

The costs that should be treated as a spending variance and not charged to the operating departments.

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Answer 4

Question

Chapter 11, Problem 15E

1.

To determine

Total variable costs have a direct relationship with the activity base. It increases or decreases in approximate proportion to increase or decrease in the activity base respectively.

Total fixed costs do not change with the change in activity base provided that activities are performed within the relevant range. Fixed costs are period costs such as rent, interest on loans, and depreciation. These costs have to be paid whether production occurs or not. That is why fixed costs remain the same at all levels of production.

:

The Medical Services Department charges the Cutting Department, Milling Department, and Assembly Department.

2.

To determine

Spending variance shows the relationship between the budgeted cost and the actual cost incurred. If the budgeted cost is more than the actual cost incurred, then it is termed a favorable spending variance and vice versa.

:

The costs that should be treated as a spending variance and not charged to the operating departments.

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Answer 5

Chapter 11, Problem 15E

1.

To determine

Total variable costs have a direct relationship with the activity base. It increases or decreases in approximate proportion to increase or decrease in the activity base respectively.

Total fixed costs do not change with the change in activity base provided that activities are performed within the relevant range. Fixed costs are period costs such as rent, interest on loans, and depreciation. These costs have to be paid whether production occurs or not. That is why fixed costs remain the same at all levels of production.

:

The Medical Services Department charges the Cutting Department, Milling Department, and Assembly Department.

2.

To determine

Spending variance shows the relationship between the budgeted cost and the actual cost incurred. If the budgeted cost is more than the actual cost incurred, then it is termed a favorable spending variance and vice versa.

:

The costs that should be treated as a spending variance and not charged to the operating departments.

Answer 6

Chapter 11, Problem 15E

1.

To determine

Total variable costs have a direct relationship with the activity base. It increases or decreases in approximate proportion to increase or decrease in the activity base respectively.

Total fixed costs do not change with the change in activity base provided that activities are performed within the relevant range. Fixed costs are period costs such as rent, interest on loans, and depreciation. These costs have to be paid whether production occurs or not. That is why fixed costs remain the same at all levels of production.

:

The Medical Services Department charges the Cutting Department, Milling Department, and Assembly Department.

Answer 7

Chapter 11, Problem 15E

1.

To determine

Total variable costs have a direct relationship with the activity base. It increases or decreases in approximate proportion to increase or decrease in the activity base respectively.

Total fixed costs do not change with the change in activity base provided that activities are performed within the relevant range. Fixed costs are period costs such as rent, interest on loans, and depreciation. These costs have to be paid whether production occurs or not. That is why fixed costs remain the same at all levels of production.

:

The Medical Services Department charges the Cutting Department, Milling Department, and Assembly Department.

Answer 8

2.

To determine

Spending variance shows the relationship between the budgeted cost and the actual cost incurred. If the budgeted cost is more than the actual cost incurred, then it is termed a favorable spending variance and vice versa.

:

The costs that should be treated as a spending variance and not charged to the operating departments.

Answer 9

2.

To determine

Spending variance shows the relationship between the budgeted cost and the actual cost incurred. If the budgeted cost is more than the actual cost incurred, then it is termed a favorable spending variance and vice versa.

:

The costs that should be treated as a spending variance and not charged to the operating departments.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 11 - Prob. 1Q Ch. 11 - Prob. 2Q Ch. 11 - Prob. 3Q Ch. 11 - Prob. 4Q Ch. 11 - Prob. 5Q Ch. 11 - Prob. 6Q Ch. 11 - Prob. 7Q Ch. 11 - Prob. 8Q Ch. 11 - Prob. 9Q Ch. 11 - Prob. 10Q

Solution Summary: The author explains that total variable costs have a direct relationship with the activity base. Fixed costs are period costs such as rent, interest on loans, and depreciation.

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