Flexible Budgets and Standard Cost Systems Chapter 23 Exercises

Flexible Budgets In-Class Exercises: Exercise No. Page E23-15 1451 Flexible Budget (Use the format, as reflected on the next slide, to complete the exercise)

Flexible Budget Exercise Page E23-15 1451 Flexible Budget

Flexible Budget (1) Selling price of each pad…..$12.00 OfficePlus sells its main product, ergonomic mouse pads and provides the following information: (1) Selling price of each pad…..$12.00 (2) Variable cost per pat………..$ 5.20 (3) Fixed costs up to 65,000 pads……$205,000 (4) Fixed costs above 65,000 pads…..$280,000 Prepare a monthly flexible budget for the product, showing sales revenue, variable costs, fixed costs, and income for volume levels of 45,000, 55,000, and 75,000 pads.

Compute the Sales Revenue: 45,000 x $12 = $540,000 Flexible Budget Compute the Sales Revenue: 45,000 x $12 = $540,000

Flexible Budget

Flexible Budget

Flexible Budget

First two volume levels have the same fixed costs. Flexible Budget First two volume levels have the same fixed costs.

Fixed costs increase at the 75,000 volume level. Flexible Budget Fixed costs increase at the 75,000 volume level.

Flexible Budget

Flexible Budget End of Exercise

Material & Labor Variances In-Class Exercises: Exercise No. Page E23-19 1452 Material & Labor Variances

Material & Labor Variances Exercise E23-19: Great Fender uses a standard cost accounting system and manufactures boat fenders. The following data is presented for 2014. (1) Manufactured 20,000 boat fenders. (2) Used 144,000 square feet of extruded vinyl, purchased at $1.05 per square foot. (3) Production required 420 direct labor hours at $13.50 per hour. (4) The direct materials standard was 7 sq. ft. of vinyl per fender, at a standard cost of $1.10 per sq. ft. (5) The labor standard was 0.025 direct labor hour per fender, at a standard cost of $12.50 per hour. Use this information to compute the cost and efficiency variances for direct materials and direct labor.

Material & Labor Variances Direct Material Variances

Direct Material Variances Preliminary data/computations: Actual quantity…………144,000 sq ft (given) Standard quantity…….. 20,000units x 7 sq ft/unit = 140,000 sq ft Actual price…………….. $1.05/sq ft (given) Standard price…………. $1.10/sq ft (given)

Direct Material Variances Preliminary data/computations: Actual quantity…………144,000 sq ft (given) Standard quantity…….. 20,000units x 7 sq ft/unit = 140,000 sq ft Actual price…………….. $1.05/sq ft (given) Standard price…………. $1.10/sq ft (given) This item requires a computation based on the data presented. (20,000 units produced requiring 7 sq ft each)

Direct Material Variances Preliminary data/computations: Actual quantity…………144,000 sq ft (given) Standard quantity…….. 20,000units x 7 sq ft/unit = 140,000 sq ft Actual price…………….. $1.05/sq ft (given) Standard price…………. $1.10/sq ft (given)

Direct Material Variances Preliminary data/computations: Actual quantity…………144,000 sq ft (given) Standard quantity…….. 20,000units x 7 sq ft/unit = 140,000 sq ft Actual price…………….. $1.05/sq ft (given) Standard price…………. $1.10/sq ft (given)

Direct Material Variances General Model Method

Direct Material Variances

Direct Material Variances Formula Method

Direct Material Variances

Material & Labor Variances Direct Labor Variances

Material & Labor Variances Exercise E23-19: Great Fender uses a standard cost accounting system and manufactures boat fenders. The following data is presented for 2014. (1) Manufactured 20,000 boat fenders. (2) Used 144,000 square feet of extruded vinyl, purchased at $1.05 per square foot. (3) Production required 420 direct labor hours at $13.50 per hour. (4) The direct materials standard was 7 sq. ft. of vinyl per fender, at a standard cost of $1.10 per sq. ft. (5) The labor standard was 0.025 direct labor hour per fender, at a standard cost of $12.50 per hour. Use this information to compute the cost and efficiency variances for direct materials and direct labor.

Direct Labor Variances Preliminary data/computations: Actual quantity……… 420 hours (given) Standard quantity….. 20,000 units x .025 hours/unit = 500 hours Actual price…………. $13.50/hour (given) Standard price……… $12.50/hour (given)

Direct Labor Variances Preliminary data/computations: Actual quantity……… 420 hours (given) Standard quantity….. 20,000 units x .025 hours/unit = 500 hours Actual price…………. $13.50/hour (given) Standard price……… $12.50/hour (given) This item requires a computation based on the data presented. (20,000 units produced using .025 hours each)

Direct Labor Variances Preliminary data/computations: Actual quantity……… 420 hours (given) Standard quantity….. 20,000 units x .025 hours/unit = 500 hours Actual price…………. $13.50/hour (given) Standard price……… $12.50/hour (given)

Direct Labor Variances Preliminary data/computations: Actual quantity……… 420 hours (given) Standard quantity….. 20,000 units x .025 hours/unit = 500 hours Actual price…………. $13.50/hour (given) Standard price……… $12.50/hour (given)

Direct Labor Variances General Model Method

Direct Labor Variances

Direct Labor Variances Formula Method

Direct Labor Variances

Direct Labor Variances End of Exercise