Flexible Budget: A flexible budget is prepared for more than one level of production and it is flexible in nature. Flexible budget can vary according to the actual level of production. It eliminates the volume variance between the budgeted values and actual result of production. Material Price Variance: At the actual quantity, the difference between the actual cost and standard cost is known as material price variance. Material Quantity Variance: The material quantity variance measures the efficiency of a production in terms of material utilization. It is computed by determining the difference between the standard quantity to used and actual quantity of material used in the production at the standard rate. Labor Rate Variance: At the actual direct labor hours, the variance between the actual direct labor cost based on actual rate incurred and the budgeted direct labor cost based on standard rate is called direct labor cost variance. Direct Labor Efficiency Variance: Direct labor efficiency variance measures the efficiency in utilization of direct labor costs by determining the difference between the actual labor hours and the direct labor hours allowed at the standard rate. To determine : 1. Determine the cost per unit of each variable overhead item and its total per unit costs and identify the total fixed costs per month. 2. Preparing flexible budgets showing the amounts of each variable and fixed cost at the 65%, 75% and 85% capacity levels. 3. Computation of direct materials cost variance, showing price and quantity variances. 4. Computation of direct labor cost variance, showing rate and efficiency variances. 5. Preparation of overhead variance report that shows the variances for individual items of overhead.

Question

Want to see the full answer?

Answer 1

Question

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

Chapter 23, Problem 3APSA

To determine

Flexible Budget:

A flexible budget is prepared for more than one level of production and it is flexible in nature. Flexible budget can vary according to the actual level of production. It eliminates the volume variance between the budgeted values and actual result of production.

Material Price Variance:

At the actual quantity, the difference between the actual cost and standard cost is known as material price variance.

Material Quantity Variance:

The material quantity variance measures the efficiency of a production in terms of material utilization. It is computed by determining the difference between the standard quantity to used and actual quantity of material used in the production at the standard rate.

Labor Rate Variance:

At the actual direct labor hours, the variance between the actual direct labor cost based on actual rate incurred and the budgeted direct labor cost based on standard rate is called direct labor cost variance.

Direct Labor Efficiency Variance:

Direct labor efficiency variance measures the efficiency in utilization of direct labor costs by determining the difference between the actual labor hours and the direct labor hours allowed at the standard rate.

To determine:

1. Determine the cost per unit of each variable overhead item and its total per unit costs and identify the total fixed costs per month.

2. Preparing flexible budgets showing the amounts of each variable and fixed cost at the 65%, 75% and 85% capacity levels.

3. Computation of direct materials cost variance, showing price and quantity variances.

4. Computation of direct labor cost variance, showing rate and efficiency variances.

5. Preparation of overhead variance report that shows the variances for individual items of overhead.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Sherryhill Corporation's capital structure consists of 50,000 shares of common stock. At December 31, 2025 an analysis of the accounts and discussions with the company officials revealed the following information; Sales Revenue $1,2,38,000, Discontinued operations loss (net of tax) $55,300, Selling expenses $126,700, Cash $59,100, Accounts receivable $88,000, Common Stock $200,000, COGS $698,500, Accumulated depreciation-machinery. $183,600, Dividend Revenue $7,200, Unearned service revenue 4,300, Interest payable $1,800, Land $360,000, Patents $117,000, Retained earnings, January 1, 2025 224,950, Interest expense 19,900, Administrative expenses $165,600, Dividends declared. $24,600 Allowance for Doubtful Accounts 5,100 Notes Payable (maturity 7/1/28) $218,000 Machinery 459,000 Materials 39,800 accounts payable. 60,200 The amount of income taxes applicable to income was $70,350, excluding the tax effect of the discontinued operations loss, which amounted to $23,700…

Why is it important for companies to use the matching principle in accounting, and how does it affect the recognition of expenses? Explain how this principle ensures that financial statements provide a true representation of profitability during a specific period.

What are some advantages and disadvantages of the single-step income statement?

Answer 2

Question

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

Chapter 23, Problem 3APSA

To determine

Flexible Budget:

A flexible budget is prepared for more than one level of production and it is flexible in nature. Flexible budget can vary according to the actual level of production. It eliminates the volume variance between the budgeted values and actual result of production.

Material Price Variance:

At the actual quantity, the difference between the actual cost and standard cost is known as material price variance.

Material Quantity Variance:

The material quantity variance measures the efficiency of a production in terms of material utilization. It is computed by determining the difference between the standard quantity to used and actual quantity of material used in the production at the standard rate.

Labor Rate Variance:

At the actual direct labor hours, the variance between the actual direct labor cost based on actual rate incurred and the budgeted direct labor cost based on standard rate is called direct labor cost variance.

Direct Labor Efficiency Variance:

Direct labor efficiency variance measures the efficiency in utilization of direct labor costs by determining the difference between the actual labor hours and the direct labor hours allowed at the standard rate.

To determine:

1. Determine the cost per unit of each variable overhead item and its total per unit costs and identify the total fixed costs per month.

2. Preparing flexible budgets showing the amounts of each variable and fixed cost at the 65%, 75% and 85% capacity levels.

3. Computation of direct materials cost variance, showing price and quantity variances.

4. Computation of direct labor cost variance, showing rate and efficiency variances.

5. Preparation of overhead variance report that shows the variances for individual items of overhead.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

Chapter 23, Problem 3APSA

To determine

Flexible Budget:

A flexible budget is prepared for more than one level of production and it is flexible in nature. Flexible budget can vary according to the actual level of production. It eliminates the volume variance between the budgeted values and actual result of production.

Material Price Variance:

At the actual quantity, the difference between the actual cost and standard cost is known as material price variance.

Material Quantity Variance:

The material quantity variance measures the efficiency of a production in terms of material utilization. It is computed by determining the difference between the standard quantity to used and actual quantity of material used in the production at the standard rate.

Labor Rate Variance:

At the actual direct labor hours, the variance between the actual direct labor cost based on actual rate incurred and the budgeted direct labor cost based on standard rate is called direct labor cost variance.

Direct Labor Efficiency Variance:

Direct labor efficiency variance measures the efficiency in utilization of direct labor costs by determining the difference between the actual labor hours and the direct labor hours allowed at the standard rate.

To determine:

1. Determine the cost per unit of each variable overhead item and its total per unit costs and identify the total fixed costs per month.

2. Preparing flexible budgets showing the amounts of each variable and fixed cost at the 65%, 75% and 85% capacity levels.

3. Computation of direct materials cost variance, showing price and quantity variances.

4. Computation of direct labor cost variance, showing rate and efficiency variances.

5. Preparation of overhead variance report that shows the variances for individual items of overhead.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

Chapter 23, Problem 3APSA

To determine