Horngren's Accounting, Student Value Edition Plus MyAccountingLab with Pearson eText, Access Card Package
11th Edition
ISBN: 9780134078946
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Textbook Question
Chapter 23, Problem P23.31BPGB
Preparing a flexible budget computing
Root Recliners manufactures leather recliners and uses flexible budgeting and a standard cost system. Root allocates
| The company’s performance report includes the following selected data: | |||
| Static Budget (1,000 recliners) | Actual Results(980 recliners) | ||
| Sales | (1,000 recliners × $505 each) | $ 505,000 | |
| (980 recliners × $490 each) | $ 480,200 | ||
| Variable |
|||
| Direct Materials | (6,000 yds. @ $8.70/yd.) | 52,200 | |
| (6,143 yds. @ $8.50/yd.) | 52,216 | ||
| Direct Labor | (10,000 DLHr @ $9.00/DLHr) | 90,000 | |
| (9,600 DLHr @ $9.10/DLHr) | 87,360 | ||
| Variable Overhead | (6,000 yds. @ $5.00/yd) | 30,000 | |
| (6,143 yds @ $6.40/yd.) | 39,315 | ||
| Fixed Manufacturing Costs | |||
| Fixed Overhead | |||
| 60,000 | 62,000 | ||
| Total Cost of Goods Sold | 232,200 | 240,891 | |
| Gross Profit | |||
| $ 272,800 | $ 239,309 | ||
Requirements
- Prepare a flexible budget, based on the actual number of recliners sold.
- Compute the cost variance and the efficiency variance for direct materials and for direct labor. For manufacturing overhead, compute the variable overhead cost, variable overhead efficiency, fixed overhead cost, and fixed overhead volume variances. Round to the nearest dollar.
- Have Root’s managers done a good job or a poor job controlling materials, labor, and overhead costs? Why?
- Describe how Root’s managers can benefit from the standard cost system.
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Juda Recliners manufactures leather recliners and uses flexible budgeting and a standard cost system. Juda
allocates overhead based on yards of direct materials. The company's performance report includes the following
selected data:
Data table
Sales
Static Budget
(1,025 recliners)
Actual Results
(1,005 recliners)
(1,025 recliners x $515 each)
(1,005 recliners x $480 each)
S
527,875
S
482,400
Variable Manufacturing Costs
Direct Materials
(6.150 yds @ $8.90/yd.)
(6,300 yds @ $8.70/yd.)
54,735
54 810
Direct Labor
(10,250 DLHr @ $11.30/DLHr)
(9,850 DLHr @ $11.40/DLHr)
115,825
112,290
Variable Overhead (6,150 yds @ $5.10/yd.)
31,365
(6,300 yds. @ $6.50/yd)
40,950
Fixed Manufacturing Costs:
Fixed Overhead
Total Cost of Goods Sold
Gross Profit
62,730
64,730
264,655
272,780
$
263,220 $
209,620
-
X
Smith Recliners manufactures leather recliners and uses flexible budgeting and a standard cost system. Smith allocates overhead based on yards of dired
(Click the icon to view the selected data.)
Read the requirements.
Requirement 1. Prepare a flexible budget based on the actual number of recliners sold. (Round budget amounts per unit to the nearest cent.)
Smith Recliners
Flexible Budget
Actual Units (Recliners)
Sales Revenue
Variable Manufacturing Costs:
Direct Materials
Direct Labor
Variable Overhead
Fixed Manufacturing Costs:
Fixed Overhead
Total Cost of Goods Sold
Gross Profit
Budget
Amounts
per Unit
Direct materials cost variance W
Direct labor cost variance
=
Direct materials efficiency variance
Direct labor efficiency variance
.
Formula
=
Variance
Formula
Data table
Sales
Variance
Variable Manufacturing Costs:
Direct Materials
(6,150 yds @ $8.60/yd.)
(6,300 yds @ $8.40/yd.)
(10,250 DLHr@ $11.20/DLHr)
(9,850 DLHr@ $11.30/DLHr)
Variable Overhead (6,150 yds. @ $5.10/yd.)
(6,300…
K
Juda Recliners manufactures leather recliners and uses flexible budgeting and a standard cost system. Juda
allocates overhead based on yards of direct materials. The company's performance report includes the following
selected data:
Data table
Sales
Static Budget
(1,025 recliners)
Actual Results
(1,005 recliners)
(1,025 recliners x $515 each)
(1.005 recliners x $480 each)
S
527,875
S
482,400
Variable Manufacturing Costs:
Direct Materials
(6.150 yds. @ $8.907 yd.)
(6,300 yds. @ $8.70/yd.)
54.735
54,810
Direct Labor
(10,250 DLHr @ $11.30 / DLHr)
(9,850 DLHr @ $11.40/DLHr)
115,825
112:290
Variable Overhead (6,150 yds @ $5.10/yd.)
31,365
(6,300 yds. @ $6.50 / yd.)
40,950
Fixed Manufacturing Costs:
Fixed Overhead
Total Cost of Goods Sold
Gross Profit
X
62,730
64,730
0
264,655
272,780
$
263,220 $
209.620
Us
Chapter 23 Solutions
Horngren's Accounting, Student Value Edition Plus MyAccountingLab with Pearson eText, Access Card Package
Ch. 23 - Prob. 1QCCh. 23 - MajorNet Systems is a start-up company that makes...Ch. 23 - MajorNet Systems is a start-up company that makes...Ch. 23 - MajorNet Systems is a start-up company that makes...Ch. 23 - MajorNet Systems has budgeted three hours of...Ch. 23 - MajorNet Systems has budgeted three hours of...Ch. 23 - FrontGrade Systems allocates manufacturing...Ch. 23 - FrontGrade Systems allocates manufacturing...Ch. 23 - FrontGrade Systems allocates manufacturing...Ch. 23 - The person probably most responsible for the...
Ch. 23 - HajorNet System’s static budget predicted...Ch. 23 - What is a variance?Ch. 23 - Explain the difference between a favorable and an...Ch. 23 - What is a static budget performance report?Ch. 23 - How do flexible budgets differ from static...Ch. 23 - How is a flexible budget used?Ch. 23 - What are the two components of the static budget...Ch. 23 - What is a flexible budget performance report?Ch. 23 - What is a standard cost system?Ch. 23 - Explain the difference between a cost standard and...Ch. 23 - Give the general formulas for determining cost and...Ch. 23 - How does the static budget affect cost and...Ch. 23 - List the direct materials variances, and briefly...Ch. 23 - List the direct labor variances, and briefly...Ch. 23 - List the variable overhead variances, and briefly...Ch. 23 - List the fixed overhead variances, and briefly...Ch. 23 - How is the fixed overhead volume variance...Ch. 23 - What is management by exception?Ch. 23 - List the eight product variances and the manager...Ch. 23 - Briefly describe how journal entries differ in a...Ch. 23 - What is a standard cost income statement?Ch. 23 - Matching terms Learning Objective 1 Match each...Ch. 23 - Prob. S23.2SECh. 23 - Prob. S23.3SECh. 23 - Matching terms Learning Objective 2 Match each...Ch. 23 - Identifying the benefits of standard costs...Ch. 23 - Prob. S23.6SECh. 23 - Prob. S23.7SECh. 23 - Interpreting material and labor variances Learning...Ch. 23 - Prob. S23.9SECh. 23 - Prob. S23.10SECh. 23 - Prob. S23.11SECh. 23 - Prob. S23.12SECh. 23 - Prob. S23.13SECh. 23 - Prob. S23.14SECh. 23 - Prob. E23.15ECh. 23 - Prob. E23.16ECh. 23 - Prob. E23.17ECh. 23 - Prob. E23.18ECh. 23 - Prob. E23.19ECh. 23 - Prob. E23.20ECh. 23 - Prob. E23.21ECh. 23 - Prob. E23.22ECh. 23 - Preparing journal entries Hayesvillc Company uses...Ch. 23 - Prob. E23.24ECh. 23 - Prob. P23.25APGACh. 23 - Preparing a flexible budget computing standard...Ch. 23 - Prob. P23.27APGACh. 23 - P23-28A Computing and journalizing standard cost...Ch. 23 - Prob. P23.29APGACh. 23 - Prob. P23.30BPGBCh. 23 - Preparing a flexible budget computing standard...Ch. 23 - P23-32B Computing standard cost variances and...Ch. 23 - P23-33B Computing and journalizing standard cost...Ch. 23 - Preparing a standard cost income statement...Ch. 23 - Prob. P23.35CPCh. 23 - Decision Case 23-1 Suppose you manage the local...Ch. 23 - Fraud Case 23-1 Drew Castello, general manager of...
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