1. Flexible Budgets and Standard Cost Systems
Chapter 23
Exercises

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

3. Flexible Budget
Exercise Page
E Flexible Budget

4. 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.

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

6. Flexible Budget

7. Flexible Budget

8. Flexible Budget

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

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

11. Flexible Budget

12. Flexible Budget
End of Exercise

13. Material & Labor Variances
In-Class Exercises:
Exercise No Page
E Material & Labor Variances

14. 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 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.

15. Material & Labor Variances Direct Material Variances

16. 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)

17. 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)

18. 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)

19. 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)

20. Direct Material Variances
General Model Method

21. Direct Material Variances

22. Direct Material Variances
Formula Method

23. Direct Material Variances

24. Material & Labor Variances Direct Labor Variances

25. 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 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.

26. 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)

27. 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)

28. 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)

29. 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)

30. Direct Labor Variances
General Model Method

31. Direct Labor Variances

32. Direct Labor Variances
Formula Method

33. Direct Labor Variances

34. Direct Labor Variances
End of Exercise