The standard factory overhead rate is $12 per machine hour ($10 for variable factory overhead and $2 for fixed factory overhead) based on 100% capacity of 42,000 machine hours. The standard cost and the actual cost of factory overhead for the production of 2,000 units were as follows:

Actual: Variable factory overhead $350,500 Fixed factory overhead 84,000

Standard: 35,000 hours @ $12 420,000

Determine the (a) volume variance, (b) controllable variance, and (c) total factory overhead cost variance.

a. Volume variance

b. Controllable variance ../

c. Total factory overhead cost variance

The following information is given for a company:

Process A Process 3

Units passing inspection 8,800 units 3,000 units

units entering process 10,000 units 5,000 units

Calculate the (a) process yield for Process A, (b) process yield for Process g, and (c) overall process yield. Round your answers to one decimal place, if necessary.

a. process yield for process A

b. process yield for process 8

c. Overall Qrocess yield

Standard and actual costs for direct labor for the manufacture of 1,500 units of product were as follows:

Actual costs 450 hours $17.00

Standard costs 455 hours a $16.50

Determine the (a) time variance, (b) rate variance, and (c) total direct labor cost variance. Round your answers to two decimal places.

a. Time variance -82.5

b. Rate variance 225

c. Total direct labar cost variance 142.5

Standard and actual costs for direct materials for the manufacture of 2,000 units of product were as follows:

Actual costs 2,750 lbs. @ $8.10

Standard costs 2,800 lbs. @ $8.00

Determine the (a) quantity variance, (b) price variance, and (c) total direct materials cost variance.

a. Quantity variance 400

b. Price variance 275

c. Total direct materials cost variance 125

Compute the standard cost for one hat, based on the following standards for each hat:

Standard Material Quantity: 3/4 yard of fabric at $4.00 per yard

Standard Labor: 1 hour at $5.75 per hour

Factory Overhead: $2.90 per direct labor hour

Round your answer to two decimal placesv

11.65

Standard and actual costs for direct materials for the manufacture of 1,000 units of product were as follows:

Actual costs 1,450 lbs. @ $8.10

Standard costs 1,500 lbs. @ $8.00

Determine the (a) quantity variance, (b) price variance, and (c) total direct materials cost variance.

a. Quantity variance 400

b. Price variance 145

c. Total direct materials cost variance 255

Trapp Co. was organized on August 1 of the current year. Projected sales for the next three months are as follows:

August

September 185,000

October 225,000

The company expects to sell 40% of its merchandise for cash. Of the sales on account, one third are expected to be collected in the month of the sale and the remainder in the following month.

Prepare a schedule indicating cash collections of accounts receivable for August, September, and October. For each month’s sales on account, enter the collection months in chronological order.

Trapp Co.

Sched ule of Collections of Accounts Receivable For Three Months Ending October 31, 20XX

August Septe mber October

August sales on account:

‘CollectédäiÄUOüSt¯•, CollQtédäiiSeptéiTibQ¯S

September sales on account:

October sales on account:

45,000

20,000 77,000

119,000

Totals

The treasurer of unisyms Company has accumulated the following budget information for the first two months of the coming year:

March

Sales $450,000 $520,000

Manufacturing costs 290,000 350,000

Selling and administrative expenses 41,400 46,400

Capital additions 250,000

The company expects to sell about 35% of its merchandise for cash. Of sales on account, 80% are expected to be collected in full in the month of the sale and the remainder in the month following the sale. One-fourth of the manufacturing costs are expected to be paid in the month in which they are incurred and the other three-fourths in the following month. Depreciation, insurance, and property taxes represent $5,400 of the probable monthly selling and administrative expenses. Insurance is paid in February, and a $40,000 installment on income taxes is expected to be paid in April. Of the remainder of the selling and administrative expenses, one-half are expected to be paid in the month in which they are incurred, with the balance paid in the following month. Capital additions of $250,000 are expected to be paid in March.

Current assets as of March 1 are composed of cash of $45,000 and accounts receivable of $51,000. Current liabilities as of March 1 are composed of accounts payable of $121,500 ($102,000 for materials purchases and

$19,500 for operating expenses). Management desires to maintain a minimum cash balance of $20,000.

Prepare a monthly cash budget for March and April.

Unisvms Company Cash Budget

For the Two Months Ending April 30, 20M

March April

Manu acturmq costs

Brown Inc.’s production budget for Product X for the year ended December 31 is as follows:

Product X

Sales 640,000 units

Plus desired ending inventory 85,000

Total 725,000

Less estimated beginning inventory, Jan. 1 go,ooo

Total production

In Brown’s production operations, Materials A, B, and C are required to make Product X. The quantities of direct materials expected to be used for each unit of product are as follows:

Product X

Material A .50 pound per unit Material B 1.00 pound per unit

Material C 1.20 pound per unit

The prices of direct materials are as follows:

Material A $0.60 per pound

Material B $1.70 per pound

Material C $1.50 per pound

Prepare a direct materials purchases budget for Product X. Enter all answers as positive amounts.

Brown Inc.

Direct Materials Purchases Budget

Microfix Company manufactures two models of Television, AR30 and AR33. Based on the following production data for April of the current year, prepare a production budget for April.

ARBO AR33

Estimated inventory (units), April 1 2,500 3,700

Desired inventory (units), April 30 Expected sales volume (units): 3,700 3,700

Eastern zone 8,200 11,500

Midwest zone 13,000 17,500

Western zone 7,300 9,100

Microfix Company

 

Based on the following production and sales data of Jackson Co. for March of the current year.

Product T Product X

Estimated inventory, March 1 25,000 units 18,000 units

Desired inventory, March 31 Expected sales volume: 32,000 units 15,000 units

Area I 320,000 units 260,000 units

Area Il Igo,ooo units 130,000 units

unit sales price

a. Prepare Sales budget. Jackson Co. Sales Budget $12

For Month Ending March 31, 20M

Product and Area Unit Sales Volume unit Selling Price Total Sales

Product T:

b. Prepare a production budget.

Jackson Co.

Production Budget

For Month Ending March 31, 20XX

Sales

Plus desired ending inventory, March 31, 20XX

Tatal

Less estimated beginning inventoryr March 1, 20XX

Total production

Prepare a monthly flexible selling expense budget for Podism Company for sales volumes of $270,000, $350,000, and $480,000, based on the following data:

Sales commissions 7% of sales

Sales manager’s salary $62,000 per month Advertising expense $70,000 per month

Shipping expense 2% of sales

Miscellaneous selling expense $2,500 per month plus 1/2% of sales

Podism Company

Monthly Selling Expense Budget

Which of the following doesn’t result in an unfavorable fixed overhead volume variance?

Increase in utility costs

Sales orders At A low level ployee inexperience

Machine breakdowns

Assuming that the standard fixed overhead rate is based on full capacity, the cost of available but unused productive capacity is indicated by the:

factory overhead cost volume variance.

C) b. direct labor cost rate variance.

C) C. factory overhead cost controllable variance.

C) d. direct labor cost time variance.

Favorable volume variances may be harmful when:

C) a . supernsors fail to maintain an even flow of work production in of normal capacity cannot sold.

C) C. machine repairs cause vwrk stoppages.

C) d. there Are Insufficient sales orders to keep the factoty aperatmg At normal capacity.

Standard Corporation uses a standard cost system. The following information was provided for the period that just ended :

Standard time per completed unit 2 hrs.

Actual total factory overhead $108,000

Fixed factory overhead $60,000

Standard fixed factory overhead rate $2.00 per labor hour

Standard variable factory overhead rate $1.50 per labor hour

Normal capacity 20,000 hours

Plant operated during the period 28,000 hours

units com >leted durinq the period 9,000

The fixed factory overhead volume variance is:

C) a. SS, 000 unfavorable.

Ob. 53,000 favorable.

C) d. 56,000 favorable.

Which of the following factors results in an unfavoreble fixed factory overhead volume variance?

An unexpected increase m the cost of utiltn€s

C) b. A budgeted Increase m sales that æqulres more advertising expenses

The payment of long-term debt payments

Work stop p ag€s CAUSéd By lack of materials

Lack of enough sales orders to keep a factory operating at normal capacity results in an unfavorable:

axed. factory overhead ‘Ælume variance.

fixed factory overhead controllable variance.

direct materials quantity variance.

budgeted variable factory overhead variance.

The is the difference between the actual variable overhead costs and the budgeted variable overhead for actual production.

variable factory overhead rate variance variaEle factory overhead controllable variance o variAhle factory overhead volume variance variahle factory overhead quantity variance

The standard factory overhead rate is $7.50 per machine hour ($6.20 for varia ble factory overhead and $1.30 for fixed factory overhead) based on 100% capacity of 80,000 machine hours. The standard cost and the actual cost of factory overhead for the production of 15,000 units during August were as follows:

Actual: Variable factory overhead $360,000

Fixed factory overhead 104,000

Standard : 60,000 hours at $7.50 450,000

What is the amount of the variable factory overhead controllable variance?

C) a. S12,OOO unfavorAbIe

S26,O O O unfavorable

C) c. S14,OOO unfavorAbIe

S12,OOO famrable

Fixed factory overhead volume variance is the difference between:

C) a. the budgeted fi.æd overhead At 100% of normal capacity and the actual fixed overhead far the actual units produced.

the budgeted fi„æd overhnd for actual units produced and the actual fi„æd overhead for the actual units produced.

the budgeted {Led overhead At 100% of normal capacity and the standard fi„æd overhead for the actual units produced, the budgeted fixed overh3Ad for actual units produced and the standard fi„Ed overhead for the actual units produced.

The standard factory overhead rate of Quaker Inc. is $10 per direct labor hour ($8 for variable factory overhead and $2 for fixed factory overhead) based on 100% capacity of 30,000 direct labor hours. The standard cost and the actual cost of factory overhead for the production of 5,000 units during May were as follows:

Standard : 25,000 hours at $10 $250,000

Actual: Variable factory overhead 202,500

Fixed factory overhead 60,000

What is the amount of the variable factory overhead controllable variance?

C) a. SIO,OOO favorAbIe

S2,SOO favorable

C) c. SIO,OOO unfavorAbIe

S2,SOO unfamrable

The standard factory overhead rate of Quaker Inc. is $10 per direct labor hour ($8 for variable factory overhead and $2 for fixed factory overhead) based on 100% capacity of 30,000 direct labor hours. The standard cost and the actual cost of factory overhead for the production of 5,000 units during May were as follows:

Standard : 25,000 hours at $10 $250,000

Actual: Variable factory overhead 202,500

Fixed factory overhead 60,000

What is the amount of the fixed factory overhead volume variance?

C) a. S12,SOO favorAbIe

510,000 unfavorable

C) c. S12,SOO unfavorAbIe Sl 0,000 fawrable

The following data is given for the Walker Company:

Budgeted production

Actual production Materials:

Standard price per 1b

Standard pounds per completed unit Actual pounds purchased and used in production

Actual price paid for materials Labor:

Standard hourly labor rate

Standard hours allowed per completed unit

Actual labor hours worked

Actual total labor costs

Overhead:

Actual and budgeted fixed overhead Standard variable overhead rate Actual variable overhead costs

Overhead is applied on standard labor hours.

The factory overhead volume variance is:

SS40 unfavorable. S6S unfavorable.

C) c. SS40 favorable.

SSS famrable.

1,000 units 980 units

$2.00

11,800

$23,000

$14 per hour

4,560

$62,928

$27,000 $3.50 per standard labor hour

$15,500

The standard casts and actual costs far direct materials, direct labor, end factory overhead far the manufacture of 2,500 units cf product are as follows:

Standard Costs

Direct materials 2,500 kilograms @

Direct labor 7,500 hours a $12

Actual Costs

Direct materials 2,600 kilograms a $8.75

Direct labor 7,400 hours a $11.40

Futory overhead (100% capacity• - hrs.):

Variable cost @ $2 per hour

Total variable cost, $18,000

Fixed cost $0.80 per hour

Total fixed cost, $8,000

The amount of the fixed factory overhead volume variance is:

52,500 favoraklé.

S2,000 unfavorable.

unfavorakle.

favorahle.

The standard fixed factory overhead rate is based on 100% capacity of 50,000 direct labor hours. The standard costs and the actual costs for factory overhead for the production of 8,000 units during the current month were as follows:

Standard : 40,000 hours at $3 $120,000

Actual: Factory overhead

(41,000 direct labor hours) 131,200

If there was a $9,000 unfavorable volume variance for December, what is the standard fixed factory overhead cost rate?

Oa. S2.40 Ob. Sl.oo v’ Sc. So.90

Od. So.ao

The standard fixed factory overhead rate is based on 100% capacity of 135,000 machine hours for Interile Inc. The standard costs and the actual costs of factory overhead for the production of 32,000 units during March were as follows:

Actual: Factory overhead $860,000

Standard: 100,000 hours at $8.00 800,000

If there was a $70,000 unfavorable volume variance for March, what is the standard fixed factory overhead cost rate?

C)a. Ss.so Ob. Ss.oo

CDC. S2.so

S2.oo

The budget procedure that requires all levels of management to start from zero in estimating sales, production, and other operating data is called zero-based budgeting.

True

O False

The master budget of a small manufacturer would normally include Ell component budgets that impact the financial statements.

@ True

C) False

[f the standard to Qroduce a given amount of product is 600 direct labor hours at $17 and the actual was 500 hours at $15, the direct labor time variance was $1,700 favorable.

@ True

C) False