Calculate the total master (static) budget variance in operating income for the period.

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Answer 1

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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.

Chapter 14, Problem 14BE

a.

To determine

Calculate the total master (static) budget variance in operating income for the period.

b.

To determine

Identify the portion of the total master (static) budget variance is attributable to actual sales volume being different from planned sales volume.

c.

To determine

Identify the portion of the total variance that is due to a combination of selling price and costs being different from budgeted amounts.

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JH, Inc., is a calendar year, accrual basis corporation with Joe as its sole shareholder (basis in his stock is $90,000). On January 1 of the current year, JH Corporation has accumulated E & P of $200,000. Before considering the effect of the distribution described below, the corporation’s current E & P is $50,000. On November 1, JH distributes an office building to Joe. The office building has an adjusted basis of $80,000 (fair market value of $100,000) and is subject to a mortgage of $110,000. Assume that the building has been depreciated using the ADS method for both income tax and E & P purposes. What are the tax consequences of the distribution to JH and to Joe? (In your answer, be sure to describe the effects on taxable income for both JH and Joe, the impact of the distribution on JH’s E & P, and Joe’s basis in the building.)

Joe is the sole shareholder of JH Corporation. Joe sold his stock to Ethan on October 31 for $150,000. Joe’s basis in JH stock was $50,000 at the start of the year. JH distributed land to Joe immediately before the sale. JH’s basis in the land was $20,000 (fair market value of $25,000). On December 31, Ethan received a $75,000 cash distribution from JH. During the year, JH has $20,000 of current E & P and its accumulated E & P balance on January 1 is $10,000. Which of the following statements is true? a. Joe recognizes a $110,000 gain on the sale of his stock. b. Joe recognizes a $100,000 gain on the sale of his stock. c. Ethan receives $5,000 of dividend income.d. Joe receives $20,000 of dividend income. e. None of the above.

Answer 2

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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.

Chapter 14, Problem 14BE

a.

To determine

Calculate the total master (static) budget variance in operating income for the period.

b.

To determine

Identify the portion of the total master (static) budget variance is attributable to actual sales volume being different from planned sales volume.

c.

To determine

Identify the portion of the total variance that is due to a combination of selling price and costs being different from budgeted amounts.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 3

Question

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.

Chapter 14, Problem 14BE

a.

To determine

Calculate the total master (static) budget variance in operating income for the period.

b.

To determine

Identify the portion of the total master (static) budget variance is attributable to actual sales volume being different from planned sales volume.

c.

To determine

Identify the portion of the total variance that is due to a combination of selling price and costs being different from budgeted amounts.

Expert Solution & Answer

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Answer 4

Question

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.

Chapter 14, Problem 14BE

a.

To determine

Calculate the total master (static) budget variance in operating income for the period.

b.

To determine

Identify the portion of the total master (static) budget variance is attributable to actual sales volume being different from planned sales volume.

c.

To determine

Identify the portion of the total variance that is due to a combination of selling price and costs being different from budgeted amounts.

Expert Solution & Answer

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Answer 5

Chapter 14, Problem 14BE

a.

To determine

Calculate the total master (static) budget variance in operating income for the period.

b.

To determine

Identify the portion of the total master (static) budget variance is attributable to actual sales volume being different from planned sales volume.

c.

To determine

Identify the portion of the total variance that is due to a combination of selling price and costs being different from budgeted amounts.

Answer 6

Chapter 14, Problem 14BE

a.

To determine

Calculate the total master (static) budget variance in operating income for the period.

Answer 7

Chapter 14, Problem 14BE

a.

To determine

Calculate the total master (static) budget variance in operating income for the period.

Answer 8

b.

To determine

Identify the portion of the total master (static) budget variance is attributable to actual sales volume being different from planned sales volume.

Answer 9

b.

To determine

Identify the portion of the total master (static) budget variance is attributable to actual sales volume being different from planned sales volume.

Answer 10

c.

To determine

Identify the portion of the total variance that is due to a combination of selling price and costs being different from budgeted amounts.

Answer 11

c.

To determine

Identify the portion of the total variance that is due to a combination of selling price and costs being different from budgeted amounts.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 14 - Prob. 1Q Ch. 14 - Explain how standard costs and flexible budgets...Ch. 14 - Explain what is meant by the term management by...Ch. 14 - Prob. 4Q Ch. 14 - Prob. 5Q Ch. 14 - Prob. 6Q Ch. 14 - Prob. 7Q Ch. 14 - Prob. 8Q Ch. 14 - Prob. 9Q Ch. 14 - Prob. 10Q

Calculate the total master (static) budget variance in operating income for the period.

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Calculate the total master (static) budget variance in operating income for the period.

Identify the portion of the total master (static) budget variance is attributable to actual sales volume being different from planned sales volume.

Identify the portion of the total variance that is due to a combination of selling price and costs being different from budgeted amounts.

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