12th Edition

ISBN: 9780134486444

Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura

Publisher: PEARSON

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A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It…

Sales Budget and Selling

A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future…

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Textbook Question

Chapter 23, Problem P23.36CP

Preparing a flexible budget and performance report

This continues the Piedmont Computer Company situation from Chapter 22. Assume Piedmont Computer Company has created a standard cost card for the PCC model tablet computer, with overhead allocated based on direct labor hours:

Direct materials	$300 per tablet
Direct labor	3 hours per tablet at $26 per hour
Variable overhead	3 hours per tablet at $5 per hour
Fixed overhead	$54,000 per month

During the month of September, Piedmont Computer Company incurred the following costs while manufacturing 1,100 PCC model tablets:

Direct materials	$ 341,000
Direct labor	88,000
Variable overhead	17,600
Fixed overhead	56,320

Requirements

1. Prepare a flexible budget for September for 900,1,000, and 1,100 PCC model tablets. The tablet has a standard sales price of $675. List variable costs separately.

2. Using 1,000 PCC model tablets for the static budget, prepare a flexible budget performance report for September Total sales revenue for the month was $767,800. The company sold

1,100 tablets.

3. What insights can the management of Piedmont Computer Company draw from the performance report?

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.

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Chapter 23, Problem P23.35CT

Chapter 23, Problem 23.1TIATC

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Chapter 23 Solutions

Horngren's Accounting (12th Edition)

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