Post Midterm Chapters Hilton Answers

P5-46
1. Unit manufacturing costs:

Predetermined overhead rate
32
Standard
$
157
Total cost
2. Activity-based overhead application rates:
Application
Activity
Rate
Order processing
$
300
Machine processing
$
14
Product inspection
$
9
Direct material
Direct labor
Activity Overhead
Total cost
P5-47
Activity
Machine
Related
Material
Handling
Purchasing
Setup
Inspection
Standard
Enhanced
$
25 $
40
36
48
120
110
$
181 $
198
Cost
Driver
Quantity for
Product Line
50,000
48,000
17,000
115,000
40
40
20
100
100
96
104
300
40
40
20
100
400
Activity
Cost for
Product
Line
$
$
$
$
$
$
$
$
$
135,000
129,600
45,900
310,500
21,000
21,000
10,500
52,500
25,000
24,000
26,000
75,000
34,000
34,000
17,000
85,000
10,000
Shipping
Engineering
Facility
400
300
1,100
500
400
200
1,100
250
200
200
650
50,000
48,000
17,000
115,000
Grand Total
P5-49
$
$
$
$
$ 1,224,000
Current OH system
Inchon
Pusan
Direct material
Direct labor
Manufacturing overhead.
Total cost per unit
$35
20
160
$215
$60
20
120
$200
Under ABC
Inchon
Pusan
Direct material
Direct labor
Manufacturing setup, machine
processing, and outgoing
shipments..
$35.00
20
$60.00
20
188.5
$243.50
104.8
$184.80
Total cost per unit
P5-52
$
$
10,000
7,500
27,500
30,000
24,000
12,000
66,000
12,500
10,000
10,000
32,500
250,000
240,000
85,000
575,000
1. Overhead to be assigned to Nitrogen Plus order:

Activity Cost Pool
Machine setups
Material handling
Assigned Overhead Cos

$
10,000
20,000
Hazardous handling
Quality control
Other overhead costs
Total
10,000
750
5,000
45,750
2. Overhead cost per box of chemicals
45.75
3. Predetermined overhead rate
31.25
4. Overhead to be assigned given a single predetermined overhead rate:
P5-53
a. Total overhead assigned
15,625
b. Overhead cost per box
15.625
280.25
cost per unit

See next sheet for 5-54
P5-55
the total contribution margin expected from the HD board is $2,760,000.

Using ABC, the contribution margin of SD Board $2,557,100
P5-56
Traditional
Full product cost
Markup (30%)
Selling price
$5.00
1.50
$6.50
ABC cost
$7.46
P5-57
see textbook for solution
P5-59
1 a)Total Manufacturing Department

budgeted cost
1b
Kona
Tuff Stuff unit cost

Ruff Stuff unit cost
$1,310,000
$28.00
$37.50
Direct-labor rate: $800,000 per 100,000

hours
Overhead rate: $350,000 per 100,000
hours
3 Tuff Stuff unit cost

Ruff Stuff unit cost
P5-60
see sheet 2
=
=
$8.00 per
hour
$3.50 per
hour
$30.57
$34.98
Enhanced
$
216
Activity
Cost
per Unit
of Product
$
27.00
32.40
45.90
4.20
5.25
10.50
5.00
6.00
26.00
6.80
8.50
17.00
2.00
2.50
7.50
6.00
6.00
12.00
2.50
2.50
10.00
50.00
60.00
85.00
igned Overhead Cost
See next sheet for 5-50
ed overhead rate:
ard is $2,760,000.
Malaysian
$6.00
1.80
$7.80
$4.82
Prob 5-54
Activities
Soldering
Shipments
Quality control
Purchase orders
Mach power
Mach Setup
Cost per model
Traceable costs
942000
860000
1240000
950400
57600
750000
4800000
Royal
Direct Material
Direct Labor
Machine usage
Manufacturing OH
Soldering
Shipments
Quality control
Purchase orders
Mach power
Mach Setup
2336000
168000
288000
COGS
4431900
Profitability analysis
Sales
COGS
Gross margin
Gross margin %
231000
163400
340800
549900
4800
350000
Royal
4560000
4431900
128100
2.81%
Gross margin per unit
32.025
Ex 5-50
2 Allocation of administrative cost based on billable hours
Inf Sys services
Billings
Less : costs
Professional staff cost
Allocation of Admin cost
387500
139500
212040
Profit
Profit %
35960
9.28%
3 Allocation based on ABC

Activity
Staff Support
In-house computing
Misc. office charges
Cost
180000
136400
25600
Inf Sys services
Billings
Less : costs
Professional staff cost
Allocation of Admin cost
Staff Support
In-house computing
Misc. office charges
387500
139500
144000
80600
10240
Profit
Profit %
13160
3.40%
Case 5-60
Pdt G
1 Target Price
Actual selling price
Current product cost
Profit
4 Percentage of Raw material
Raw material cost per unit
Volume
Total RM cost
Raw material cost %
286.50
213.00
191.00
22.00
Pdt G
35
8000
280000
25%
5
Pdt G
Direct material
Direct labor
Machine setup
Machinery
Inspection
35.00
16.00
0.13
38.28
9.84
Material handling
Engineering
Total
27.34
15.08
141.68
Target price based on new

Current selling price
212.52
213
Profit based on ABC cost
P5-66
71.32
DATA INPUT
Customer-Related Activities
Sales activity
Order taking
Special handling
Special shipping
Cost Driver Base

Sales visits
Purchase orders
Units handled
Shipments
Customer-Related Activities
Sales activity
Order taking
Special handling
Special shipping
Krondor
16
30
800
9
Krondor
Sales revenue
Cost of goods sold
General selling costs
General administrative costs
200,000
90,000
24,000
19,000
SOLUTION
1. Customer-profitability analysis:
Krondor
$
Sales revenue
Cost of goods sold
$
Gross margin
Selling and administrative costs:
General selling costs
$
General administrative costs
Customer-related costs:
200,000
90,000
110,000
24,000
19,000
Sales activity
Order taking
Special handling
Special shipping
Total selling and administrativ $
Operating income
$
8,000
3,000
40,000
9,000
103,000
7,000
Cost driver
No.of solder joints
No.of shipments
No. of Inspections
No. of orders
Mach hours
No.of setups
Budgeted levelCost driver rate

1570000
0.6
20000
43
77500
16
190080
5
192000
0.3
30000
25
Nova
traditional method OH
Royal
Nova
4576000
396000
3168000
711000
696600
899200
400500
52800
400000
11300100
Nova
Total
19800000
11300100
8499900
42.93%
386.3590909091
llable hours
E- comm consul
237500
85500
129960
24360000
15732000
8628000
22040
9.28%
Activity driver
250 clients
4400 comp hrs
1000 client transa
Allocation Rate
720
31
25.6
E- comm consul
237500
85500
36000
55800
15360
44840
18.88%
Pdt T
254.25
254.25
169.50
84.75
Pdt T
Pdt W
143.25
200.00
95.50
104.50
Pdt W
52.5
15000
787500
69%
17.5
4000
70000
6%
52.50
12.00
0.11
40.83
15.75
Pdt W
17.50
8.00
0.66
76.56
52.50
Pdt T
1137500
Cost Driver Rate

$
40.25
2.30
163.74
13.13
47.40
215.75
245.61
254.25
323.62
200
90.51
-15.75
500
100
50
1,000
Feist
12
40
600
10
Feist
$
123,800
62,000
19,000
15,000
Feist
$
$
$
123,800
62,000
61,800
19,000
15,000
$
$
6,000
4,000
30,000
10,000
84,000
(22,200)
iver rate
per
per
per
per
per
per
SJ
shipment
inspection
purchase order
mach hr
setup
nal method OH
400000
4400000
4800000
See below for solution to 14-44, 14-45 etc. Solutions not in the same order as in the
P 14-47
Sales
Variable costs
Contribution margin.
CM Ratio
1 If Wall paper operation is closed
Loss of contribution from WP
Increase in contribution from carpet
Remodeling cost
Saving in fixed cost
Loss of contribution from P&S
Increase in Advertisement
P&S
380,000
228,000
152,000
0.4
Gains/savings
65000
18000
83000
Net gain/ loss
-12,800
Ex 14-49
Relevant cost
Purchased components
Assembly labor
Variable manufacturing overhead
Total relevant cost
It should purchase since purchase price 68 is less than relevant cost 71
Ex 14-53
1 Incremental cost of B81
Direct material
Direct labor
Variable overhead
Total variable cost per unit
Purchase price
Loss per unit if purchased
Loss per mach hr if purchased
2 Purchase price quoted

Direct material
Direct labor
Variable overhead
Total variable cost

Net benefit of making
Mach hrs per unit
Benefit from mach hr
Best Use
8000 units of T79
Mach hrs reqd.
Balance hrs
No. of units of B 81 that can be made
No. of units of B 81 to be purchased
3 Maximum price for B 81
Variable cost of making
Fixed costs avoidable per unit
Ex 14-55
Kaytell's offer - special order
Sale price
Less : Relevant cost
Direct material
Direct labor
Variable manufacturing cost
Selling commission
6200
4200
2100
2052
Relevant profit
Converting into standard model
Sale price
Direct material
Direct labor
Selling commission
Sales discount
Relevant profit
Sell as is
Sale price
2850
3300
1650
1250
1250
Sales discount
Kaytell's counter offer

Relevant cost
Direct material
Direct labor
Selling commission
6200
4200
2100
Add:minimum contribution required

Sale price
52200+12500+3%*X=X
97%X
X
64700
66701.03
Ex 14-51
Revenue from further processing of RNA-2:
DMZ-3
Pestrol
Total revenue from further processing
Less: Revenue from sale of RNA-2
Incremental revenue
Less:Incremental cost
Incremental profit
Ex 14-57
Machine hours reqd.
M07
T28
B19
Total
Available
Excess/deficiency
Dept.1
Labour hours reqd.

M07
T28
Dept.1
500
400
2000
2900
3000
100
1000
400
B19
Total
Available
Excess/deficiency
2000
3400
3700
300
M07
Selling price
Less:Variable cost
Contributon PU
Contributon per Lab hr
in dept.3
Production Schedule
T28
B19
M07
196
103
93
31
units
400
1000
250
Case 14-63
Q-Guage
Unit selling price
Unit manufacturing cost
Direct material
Direct Labor
Variable mftg OH
Shipping expenses
Total variable cost
Contribution
Increase in sales (units)
Decrease in sales (units)
200
31
40
45
10
126
74
1200
Increase/ decrease in contribution

Additional cost
Saving in cost
88800
100000
Segment Contribution net effect
-11200
Contibution per labor $
1.85
Prob 14-44
1.
Unit cost if purchased from outside supplier
Incremental cost if manufactured:
Direct Material
Direct Labor
Variable overhead
$16 - $10 per hour fixed
$32 - (2)($10 per hour fixed)
Total
Unit cost savings if manufactured
Machine hours equired per unit
Cost savings per machine hour if manufactured
$4 / 1 hour
$6 / 2 hour
Therefore each machine hour devoted to the production of
machine hour devoted to
Electric Mixer
Machine hours available
Machine Hours needed to manufacture 20000 Blenders
Remaining machine hours
Number of Electric Mixers to be produced
Conclusion:
Manufacture
Manufacture
Purchase
Purchase
P14-46
Basic
Selling price
Less: Variable costs:
Direct material
Direct labor
Variable manufacturing overhead
Sales commission
$28
15
24
27
Total unit variable cost

Unit contribution margin
The following costs are not relevant to the

decision:
Development costssunk
Fixed manufacturing overheadwill be
incurred regardless of which product is
selected
Sales salariesidentical for both
products
Market studysunk
3 Total contribution margin:
Basic
$1,760,000
Less: Marketing and advertising
130,000
Income...
$1,630,000
P 14-56
DATA INPUT
Monthly capacity
Current production
Price per medal
Variable Costs
Manufacturing
Direct Labor
Direct Material
Marketing
Total Variable Costs
Fixed Costs
Manufacturing
Marketing
Total Fixed Costs
Total Costs
Variable cost per unit
Fixed cost per unit
Average unit cost
Special Order
2500 medals ordered

$100 per medal
SOLUTION
Units produced
Sales
Variable costs:
Direct labor
Direct material
Marketing
Total Variable Costs
Fixed Costs
Manufacturing
Marketing
Total Fixed Costs
Total Costs
Income before tax
Cost per units
Variable
Fixed
Average unit cost
e
f
g
a
b
c
d
e
f
g
$175 x 7500 units = $1312500

$100 x 2500 units = $250000
($375000 / 7500 units) x2500 u
($262500 / 7500 units) x2500 u
Total variable cost / units produ
Total fixed cost / units produced
Total cost / units produced = av
P14-48
Selling price
Direct material
Direct labor
Variable overhead
Total variable cost

Contribution
margin
Contribution margin per unit

Direct-labor hours required
Contribution margin per direct-labor hour
Ranking
P14-54
1 Incremental unit cost if purchased:
Purchase price
Material handling
Total
Incremental unit cost if manufactured:
Direct material
Material handling
Direct labor
Variable manufacturing overhead ($12,000
1/3)
Total
Increase in unit cost if purchased ($18,000
$13,200)
2 Increase in monthly cost of acquiring part
JR63 if purchased
(10 $4,800, as computed above)
Less: rental revenue from idle space

Increase in monthly cost
3 Contribution forgone by not manufacturing
alternative product
Savings in the cost of acquiring JR63
(10 $4,800 as computed in requirement 1)
$15,000
$3,000
$18,000
$1,000
200
8,000
4,000
$13,200
$4,800
$48,000
25,000
$23,000
$52,000
48,000
Net cost of using limited capacity to produce

part JR63
14-62
Selling price
Less:
Material
Direct labor
Manufacturing overhead* *
Selling and administrative cost
Contribution margin
Direct-labor hours per unit
Contribution per hour
$4,000
Purchased
Tackle
Boxes
$86.00
-68
(4.00)
$14.00
*Calculation of variable overhead per unit:
Tackle boxes:
Direct-labor hours
Overhead per direct-labor hour
Capacity
Total overhead
Total variable overhead
Variable overhead per hour
Variable overhead per box
Skateboards:
Direct-labor hours
Variable overhead
In calculating the contribution margin, $6.00 of fixed overhead cost per unit for distribution m
from the selling and administrative cost.
Production plan
17500 skate boards

1000 tackle boxes
The optimal use of Sportways available

direct-labor hours (DLH):
Item
Quantity
Total hours
Skateboards
Make boxes
Buy boxes
Total contribution
Less:
Contribution from manufacturing 8,000 boxes
(8,000 $33.00)
Improvement in contribution margin
P14-45
17,500
1,000
9,000
Net contribution to profit

Available hours
34,050
4,500
Required machine hours (11,000 units x .5)
5,500
P14-50
Savings if purchased
P14-52
Incremental contribution margin
$5,840
$42,945
Linear programming problems not relevant for the exam
e same order as in the book but numbered correctly
Carpet
460,000
322,000
138,000
0.3
WP
140,000
112000
28,000
0.2
Losses/ additional exp

28,000
12400
30400
25000
95,800
Total
110,000
300,000
300,000
710,000
Per unit
11
30
30
71
elevant cost 71
3.75
4.50
2.25
10.50
13.50
-3.00
-1
T79
B81
11.25
2.25
4.00
2.00
13.50
3.75
4.50
2.25
8.25
10.50
3.00
2.5
1.2
3.00
3
1
20000
21000
7000
4000
10.50
4.00
14.50
68400
14552
53848
62500
10300
52200
52000
1560
50440
12500
3%*x
52200
X
230000
230000
460000
320000
140000
120000
20000
Dept.2
500
400
2000
2900
3100
200
Dept.2
1500
800
Dept.3
1000
1000
2000
2700
700
Dept.3
1500
Dept.4
1000
800
1000
2800
3300
500
Dept.4
500
800
2000
4300
4500
200
T28
2000
3500
2750
-750
B19
123
73
50
CPU
1000
2300
2600
300
167
97
70
35
Deptt 3
Lab hrs reqd
nil
1500
1250
2750
Total contribution
50
20000
70
70000
93
23250
113250
E-Guage
R-Guage
90
180
17
20
30
4
71
50
60
60
10
180
19
5000 Discontinue
-95000
80000
40000
-15000
40000
0.95
13800
Blender
Electric Mixer
20
38
6
4
11
9
6
0
16
4
1
0
12
32
6
2
4
3
(
Blender
production
50000
20000
30000
15000
20000 blenders
15000 mixers
0 blenders
13000 mixers
Basic
Enhanced
$270
$350
$45
20
32
35
$94
$176
$132
$218
Enhanced
$1,744,000
200,000
$1,544,000
10000 medals per month

7500 medals per month
$
175.00
$
$
$
$
375,000
262,500
187,500
825,000
$
$
$
275,000
175,000
450,000
1,275,000
$
$
$
110.00
60.00
170.00
Current Monthly Production

7500
$
1,312,500 a
Special Order
2500
$250,000 b
Combined Production
10000
$ 1,562,500
$
$
$
$
375,000
262,500
187,500
825,000
$
$
$
$
125,000 c
87,500 d
212,500
$
$
$
$
500,000
350,000
187,500
1,037,500
$
$
$
$
$
275,000
175,000
450,000
1,275,000
37,500
$
$
$
$
212,500
$37,500
$
$
$
$
$
275,000
175,000
450,000
1,487,500
75,000
$
$
$
110.00
60.00
170.00
$
$
$
85.00
85.00
$
$
$
103.75
45.00
148.75
00 units = $1312500
00 units = $250000
/ 7500 units) x2500 units = $125000
/ 7500 units) x2500 units = $87500
ble cost / units produced = variable incremental cost per unit
cost / units produced = fixed cost per unit
/ units produced = average cost per unit
Home
Model
$58
16
10
8
Deluxe
Model
$65
20
15
12
Pro
Model
$80
19
20
16
$34
$55
$47
$24
$25
$18
Deluxe
Model
$18
1.5
$12
Home
Model
$24
1.0
$24
1
Pro
Model
$25
2.0
$12.50
3
Tackle
Boxes
$86.00
-17
-18.75
-6.25
-11
$33.00
-12.5
-7.5
-2.5
(3.00)
$19.50
1.25
$26.40
0.5
$39.00
$18.75 $15.00 = 1.25 hours

$12.50 1.25 = $10.00
8,000 boxes 1.25 = 10,000
hours
10,000 hours $10 per hour =
$100,000
$100,000 $50,000 = $50,000
$50,000 10,000 = $5.00
$5.00 1.25 = $6.25
$7.50 $15.00 = .5 hours
$5.00 .5 = $2.50
unit for distribution must be deducted
te boards
Manufactured
Skateboards
$45.00
DLH
per
Unit
Total
DLH
.50
1.25
8,750
1,250
Balance
of
DLH
10,000
1,250
Unit
Contribution
$19.50
33
14
Total
Contribution
$341,250
33,000
126,000
$500,250
264,000
$236,250
$5,840
Production
Ex9-25
SOLUTION
1. Cash collections in October:
Month
of Sale
July
August
September
October
Total
2. Cash collections in 4th quarter from credit sales in 4th quarter:
Month of Sale
October
November
December
Total
Total collections in 4th quarter
from credit sales in 4th quarter
EX9-31
SOLUTION
1. Direct professional labor budget schedule for the month of June:
Office visits per month
Professional services in June:

1-hour visits
1/2 hour visits
Total direct professional labor
Hourly rate for dental associates
Total direct professional labor cost
25%
75%
2. Cash collections during June for professional services rendered during May and June:
1/2 hour visits

Billing rate
Total billings for 1/2-hour visits
1-hour visits
Billing rate
Total billings for 1-hour visits
Total billings during the month
Percentage of month's billings collected during June
Collections during June
Total collections in June
3. Overhead and administrative expense budget schedule for the month of June:
Patient registration and records
Other overhead and adminstrative expenses
Total overhead and adminstrative expenses
P.9-32
SOLUTION
1. Complete sales budget schedule:
Sales budget:
Sales (in sets)
Sales price per set
Sales revenue
2. Complete production budget schedule:
Production budget:
Sales
Add: Desired ending inventory
Total requirements
Less: Projected beginning inventory
Planned production
3. Complete raw-material purchases schedule:
Raw- material purchases:
Planned production (sets)
Raw material required per set (board feet)
Raw material required for production (board f

Add: Desired ending inventory of raw materia
in board feet (10% of next month's requireme
Total requirements
Less: Projected beginning inventory of raw
material, in board feet (10% of current
month's requirement)
Planned purchases of raw material (board fee
Cost per board foot
Planned purchases of raw material (dollars)
4. Complete direct-labor budget schedule:
Direct-labor budget:
Planned production (sets)
Direct-labor hours per set
Direct-labor hours required
Cost per hour
Planned direct-labor cost
Ex9-24
Production (in units) required for the year:

Sales for the year
Add: Desired ending finished-goods inventory on
December 31
Deduct: Beginning finished-goods inventory on
January 1
Required production during the year
480,000
50,000
80,000
450,000
2 Purchases of raw material (in units), assuming

production of 500,000 finished units:
Raw material required for production (500,000

2)
Add: Desired ending inventory on December 31
1,000,000
Deduct: Beginning inventory on January 1

Required raw-material purchases during the year
35,000
1,010,000
45,000
Ex9-26
1 The total required production is 655,720 units, computed as follows:
2 Total raw-material purchases during third quarter
$2,645,000
Ex 9-27
Bingham
Expecte
Month
June
July
August
Total
Ex9-32
Binghamton Film Corporation

Expected Cash Disbursements
August
July purchases to be paid in August
Less: 2% cash discount
$54,000
1,080
Net
Cash disbursements for expenses
Total
$52,920
14,400
$67,320
Production and direct-labor budgets
Sales (units)
Add: Ending inventory*
Total needs
Deduct: Beginning inventory
Units to be produced
Direct-labor hours per unit
Total hours of direct labor
time needed
Spiffy Shades Corporation

Budget for Production and Direct Labor
For the First Quarter of 20x1
Month
January
10,000
16,000
26,000
16,000
10,000
1
10,000
Direct-labor costs:
Wages ($16.00 per DLH)
$160,000
Pension contributions
($.50 per DLH)
Workers' compensation
insurance ($.20 per DLH)
Employee medical insurance
($.80 per DLH)
Employer's social security
(at 7%)
Total direct-labor cost
5,000
2,000
8,000
11,200
$186,200
*100 percent of the first following month's sales plus 50 percent of the second following mont
DLH denotes direct-labor hour.

EX9-32
Spiffy Shades Corporation
Manufacturing Overhead Budget
For the First Quarter of 20x1
January
Shipping and handling
Purchasing, material handling,
and inspection
Other overhead
Total manufacturing overhead
$20,000
30,000
70,000
$120,000
Ex 9-34
1. Schedule of cash collections:
Total cash collections
January
$101,000
2. Schedule of cash disbursements:

January
Total cash disbursements...
$116,000
3. Cash budget:
January
P9-39
Cash excess (deficiency) before financing

Financing:
Borrowing to maintain $20,000 balance..
Loan principal repaid
Loan interest paid..
Ending cash balance
Production budget
$5,000
15,000
$20,000
Yarex
Sales for 20x2

Add: Inventory, 12/31/x2
(.08 20x3 sales)
Total required
Deduct: Inventory, 12/31/x1
(.08 20x2 sales)
Required production in 20x2
Conversion cost budget
Conversion hours required:
Yarex (60,400 .07)
Darol (39,600 .10)
Norex (25,400 .16)
Total hours
60,000
Conversion cost budget (12,252 $20)
$245,040
5,200
65,200
4,800
60,400
4,228
3,960
4,064
12,252
Quantity of Islin required for production in 20x2

(in gallons):
Yarex (60,400 1)
60,400
Darol (39,600 .7)
27,720
Norex (25,400 .5)
12,700
Subtotal
100,820
Add: Required inventory, 12/31/x2 (100,820 . 10,082
10)
Subtotal
110,902
Deduct: Inventory, 1/1/x2 (100,000 .10)
10,000
Required purchases (gallons)

100,902
Purchases budget (100,902 gallons $5 per $504,510
gallon)
Change in material cost from substituting Philin
for Islin:
20x2 production requirements:
Philin (100,820 $5 1.2)
$604,920
Islin (100,820 $5)
504,100
Increase in cost of raw material
$100,820
Change in conversion cost from substituting
Philin for Islin:
Philin (12,252 $20 .9)
$220,536
Islin (12,252 $20)
245,040
Decrease in conversion cost
($24,504)
Net increase in production cost
$76,316
P9-40
1. Sales budget for 20x0:
Light coils
Heavy coils
Projected sales
Units
60,000
40,000
problem 9-40 (continued)

2 Production budget (in units) for
20x0:
Projected sales
Add: Desired inventories,
December 31, 20x0
Total requirements
Deduct: Expected inventories, January 1, 20x0
Production required (units)
3 Raw-material purchases budget

(in quantities) for 20x0:
Light coils (65,000 units projected

to be produced)
Heavy coils (41,000 units projected
to be produced)
Production requirements
Add: Desired inventories, December 31, 20x0
Total requirements
Deduct: Expected inventories,
January 1, 20x0
Purchase requirements (units)
4 Raw-material purchases budget f
Raw Material
Sheet metal
Copper wire
Platforms
Total
5 Direct-labor budget for 20x0:
Light coils
Heavy coils
Total
6.
Manufacturing overhead budget for 20x0:
Cost Driver
Quantity
Purchasing and material handling
Depreciation, utilities, and inspection
Shipping
General manufacturing overhead
Total manufacturing overhead
725,000 =
106,000 =
c
100,000 =
d
253,000 =
a
469,000 +
65,000 +
60,000 +
130,000 +
725,000
106,000
100,000
253,000
256,000 (from req. 3)

41,000 (from req. 2)
40,000 (total units sold, from problem)
123,000 (from req. 5)
Detailed solution to P9-45 is attached as a separate file
y and June:
Amount Collected in October

Sales
% Collected
Collection
60,000.00
0.04
2,400
70,000
80,000
90,000
x
x
x
0.10
0.15
0.70
7,000
12,000
63,000
84,400
Amount Collected
Credit
Sales
October
90,000
100,000
85,000
November
December
63,000
13,500 $
70,000
63,000
83,500 $
9,000
15,000
59,500
83,500
230,000
=
=
48,000
4,000
12
x
x
4,000
4,000
x
x
1 hr.
1/2 hr.
=
=
x
$
$
1,000
1,500
2,500
60
150,000
May
4,000
75%
=
$
4,000
25%
=
$
$
$
19,000
4,000 visits
2,500 hours
$
$
nding inventory
beginning inventory
purchases:
equired per set (board feet)
3,000
40
120,000
1,000
70
70,000
190,000
10%
19,000
171,000
x
x
$
$
2.00 per visit =

6.00 per hour =
April
10,000
50 ###
500,000 $
May
12,000
April
10,000
2,400
12,400
2,000
10,400
May
12,000
3,000
15,000
2,400
12,600
June
15,000
3,000
18,000
3,000
15,000
April
10,400
0 ###
May
12,600
June
15,000
0
600,000
$
$
June
15,000
50
750,000
equired for production (board feet)

nding inventory of raw material,
0% of next month's requirement)
2,080
2,520
3,000
252
2,332
300
2,820
16,000
19,000
252
2,568
$
$
300
18,700
250.00
4,675,000
$
$
June
15,000
1.5
22,500
22.00
495,000
beginning inventory of raw

rd feet (10% of current
$
$
208
2,124
250.00 ###
531,000 $
$
$
April
10,400
1.5 ###
15,600
22.00 ###
343,200 $
ases of raw material (board feet)
ases of raw material (dollars)
urs required
ollows:
642,000
May
12,600
18,900
415,800
Binghamton Film Corporation

Expected Cash Collections
August
Expected
Collections
Sales
$60,000
78,000
66,000
Percent
9%
20%
70%
rporation
nd Direct Labor
er of 20x1
Month
February
12,000
12,500
24,500
16,000
8,500
1
March
8,000
13,500
21,500
12,500
9,000
.75
8,500
6,750
$5,400
15,600
46,200
$67,200
Quarter
30,000
13,500
43,500
16,000
27,500
25,250
$136,000
$108,000
$404,000
4,250
3,375
12,625
1,700
1,350
5,050
6,800
5,400
20,200
9,520
$158,270
7,560
$125,685
28,280
$470,155
second following month's sales.
Month
February
March
Quarter
$24,000
25,500
$16,000
27,000
$60,000
82,500
59,500
$109,000
47,250
$90,250
176,750
$319,250
February
$160,500
March
$179,000
February
March
$121,000
$173,000
February
March
$59,500
$50,300
-15,000
(200)*
$44,300
$50,300
Darol
40,000
Norex
25,000
2,800
42,800
2,400
27,400
3,200
39,600
2,000
25,400
Price
$120
170
Total
$7,200,000
6,800,000
$14,000,000
budget (in units) for

Light Coils Heavy Coils
60,000
40,000
25,000
85,000
20,000
65,000
al purchases budget
es) for 20x0:
9,000
49,000
8,000
41,000
Sheet
Metal
Raw Material
Copper Wire
Platforms
260,000
130,000
__
205,000
465,000
36,000
501,000
123,000
253,000
32,000
285,000
41,000
41,000
7,000
48,000
32,000
469,000
29,000
256,000
6,000
42,000
al purchases budget for 20x0:

Raw Material Required (units)
469,000
256,000
42,000
Anticipated Purchase Price
$16
10
3
Total
$7,504,000
$2,560,000
$126,000
$10,190,000
r budget for 20x0:

Projected
Production
(units)
65,000
41,000
Hours
per
Total Hours
Unit
2
3
130,000
123,000
Rate
$15
20
$1,950,00
2,460,0
$4,410,00
Cost Driver
Rate
$0.55
$4.00
$1.00
$3.00
Budgeted Cost
$398,750.00
$424,000.00
100,000
$759,000.00
$1,681,750
hours
hours
hours
$
$
$
June
3,000
40
120,000
1,000
70
70,000
190,000
90%
171,000
190,000
8,000
15,000
23,000
Total
Cost
$1,950,000
2,460,000
$4,410,000
Ex 10-28 Standard Direct labor:

Quantity
Rate
Actual data:
Material purchases
Price
Actual costs incurred in the production of:
Direct labor:
Direct material:
SOLUTION
1. Direct-material price variance
Direct-material quantity variance
* SQ =
Direct-labor rate variance
* AR =
* SH =
P10-42
Control valves manufactured in January:
Actual costs:
Direct labor
Direct material purchased

Direct material used
Standard prime costs:
Direct material
Direct labor
Standard prime cost per unit
SOLUTION
1) Schedule of standard production costs, based on actual production of 7
New Jersey Valve

Camden P
Schedule of Standard P
Based on 7,80
For the Month o
Direct material
Direct labor
Total standard production costs
2) Variances:
a) Direct-material price variance
b) Direct-material quantity variance
* SQ =
c) Direct-labor rate variance
d) Direct-labor efficiency variance
* SH =
P10-50
Labor Class III

Labor Class II
Labor Class I
Labor Class III

Labor Class II
Labor Class I
SOLUTION
1) Variances (U denotes unfavorable; F denotes favorable):
a) Direct-labor rate variance for each labor class:
Labor Class
III
II
I
Total
b) Direct-labor efficiency variance for each labor class:
Labor Class
III
II
I
Total
* Given April's output of production.
Exercise 10-36
Direct Labor
Standard price or rate per unit of input
Standard quantity per unit of output
Actual quantity used per unit of output
Direct Material
$20 per hr
4 hrs per unit
$ 35,000 U
P10-43
Direct
Material
Nyclyn
Salex
Protet
Standard material cost
for each 10-liter container
Problem 10-44
1
2
3
4
Direct-material price variance =$540 Unfavorable

Direct-material quantity variance = $675 Favorable
Direct-labor rate variance = $525 Unfavorable
Direct-labor efficiency variance = $890 Unfavorable
P10-45
Price variance: Type 1
Actual quantity purchased x actual price
Actual qty purchased X standard price
Price variance: Type 1
Quantity variance:
Standard quantity
Actual quantity
Material qty variance type1
Price variance: Type II

Actual quantity purchased x actual price
Actual qty purchased X standard price
Price variance: Type II
2.75 lbs per u

3 lbs per unit
$20,000 U
Quantity variance:
Standard quantity
Actual quantity
Material qty variance typeII
Rate variance:
Actual hours used x actual rate
Actual hours used x standard rate
165 hours x $9.00
Efficiency variance:
Actual hours used x standard rate
165 hours x $9.00.
Standard hours allowed x standard rate
Direct-labor efficiency variance.
* 2/3 hours x 55 clients x 6 applications
Total variance
P10-46
Production
Actual costs:
Direct labor
Direct material
Direct labor
SOLUTION
Direct material
Direct labor
2) Variances:
* SQ =
* SH =
P10-48
Production
Actual costs:
Direct labor
Direct material
Direct labor
SOLUTION
Direct material
Direct labor
2) Variances:
* SQ =
* SH =
P10-57
*$300,760 36,500 hours

Direct-labor efficiency variance
*Standard allowed direct-labor hours:

Completed units
Partially completed
units
Total standard
hours allowed
Actual quantity of material used:
Therefore: $5(AQ 51,200)

AQ 51,200
AQ
*Standard quantity of material allowed:
Completed units
Partially completed
units
Total standard
quantity allowed
d.
Actual price paid per kilogram of direct material:

Actual price
e.
Direct-material and direct-labor cost transferred to finished goods:
f.
Direct-material and direct-labor cost in November 30 balance of Work-in-Process Inv
Case 10-62
1 Standard cost of lots 22, 23, and 24:
Europe
Standard C
For
Lot
22
23
24
Standard cost of production
*Standard material cost plus 80 percent of standard cost of labor and overhead:
$26.40 + (80%)($44.10 + $36.00).
2 Variances (U denotes unfavorable; F denotes

favorable):
European Styles, Inc.
Direct-Material Price Variance
For November
Actual cost of materials purchased
Standard cost of materials purchased
(95,000 $1.10)
Direct-material price variance
Europe
Direct-Material an
For
Direct-material quantity variance:
Standard yards:
Boxes in lot
Standard yards
per box
Total standard
quantity
Actual yards used
Variance in yards*
Standard price
Direct-material
quantity variance
*Parentheses denote favorable variance.
Standard rate
Direct-labor
efficiency variance
*Parentheses denote favorable variance.
Direct-labor rate variance:

Actual hours worked
Rate paid in excess of standard

($15.00 $14.70)
Variance
Ignore the journal entries

Interpret the variances as favourable and unfavourable.
Do not use '+' or '-' signs
textbooks uses the formula differently from what is discussed in class
$
$
Standard Direct material:

Quantity
4
Price $
0.80
0.25 hour
16.00 per hour
240,000 kilograms
0.81 per kilogram
211,900
170,100
50,000 units were as follows:

13,000 hours
210,000 kilograms
for
for
=
=
=
PQ
x
240,000
x
$
2,400 Unfavorable
=
=
=
SP
x
0.80
x
8,000 Unfavorable
$
$
200,000 kgs =
211,900
(AQ
210,000
50,000 units
=
=
=
/
=
=
=
12,500 hrs. =
(AP
0.81
(AR*
16.30
AH
x
13,000
x
3,900 Unfavorable
13,000
16.30
$
$
SR
x
16.00
x
8,000 Unfavorable
(AH
13,000
50,000 units
7,800
40,100 hr. at
14.60
12,500 lb. at
11,550 lb.
2 lbs. at
5 hrs. at
$
$
2.60
5.00 per lb
15.00 per hr.
, based on actual production of 7,800 units:

New Jersey Valve Company
Camden Plant
Schedule of Standard Production Costs
Based on 7,800 Units
For the Month of January
7,800 units x
7,800 units x
=
=
=
=
=
=
2 lbs x
5 hrs. x
(PQ
x
12,500
x
(30,000) Favorable
(AQ
x
11,550
x
(750) Favorable
7,800 units
=
=
=
(AH
x
40,100
x
(16,040) Favorable
=
=
=
(AH
x
40,100
x
16,500 Unfavorable
$
$
5.00
15.00
AP)
2.60
SP)
5.00
2 lbs per unit
AR)
14.60
SR)
15.00
7,800 units
5 hrs per unit
Standard
Direct-Labor
Rate per Hour
$
16.00
14.00
10.00
Standard
Direct-Labor Hours
Allowed, Given April Output
500
500
500
Actual
Direct-Labor
Rate per Hour
$
17.20
15.00
10.80
Actual
Direct-Labor
Hours
550
650
375
enotes favorable):
or class:
Actual
Rate
Standard
Rate
17.20 $
16.00
15.00
14.00
10.80
10.00
Actual
Hours
Standard
Hours *
500
500
500
Difference
in Rates
$
1.20
1.00
0.80
Actual
Rate
Hours
Variance
550 $
660
650 $
650
375 $
300
$
1,610
h labor class:
550
650
375
Difference Standard
Efficiency
in Hours
Rate
Variance
50 $
16.00 $
800
150
14.00 $
2,100
(125)
10.00 $
(1,250)
$
1,650
irect Material
$20 per hr
4 hrs per unit
2.75 lbs per unit

3 lbs per unit
$20,000 U
$ 35,000 U
Initial
Mix
12 kg
9.6 ltr
5 kg
Unit
Cost
1.45
1.80
2.40
Standard
Material
Cost
17.4
17.28
12
46.68
2700
2500*1.08
$ 200 Unfavorable
2200
$1,850
350
4000
4,200
$ 200 favorable
Favourable
4400
$3,900
420
Favourable
1897.5
1,485.00
412.50
Unfavourable
$1,485.00
1,980.00
$495.00
Favourable
$852.50
9,500
20,900 hr. at
22,500 lb. at
22,500 lb.
2 lbs. at
2.60 hrs. at
9,500 units x
$
$
2 lbs x
$
$
16.00
15.40
17.60 per lb
14.00 per hr.
17.60
9,500 units x
=
=
=
=
=
=
3 hrs. x
(PQ
x
22,500
x
(49,500) Favorable
(AQ
x
22,500
x
44,880 Unfavorable
9,500 units
14.00
AP)
15.40
SP)
17.60
2 lbs per unit
=
=
=
(AH
x
20,900
x
41,800 Unfavorable
=
=
=
(AH
x
20,900
x
(53,200) Favorable
9,500 units
AR)
16.00
SR)
14.00
3 hrs per unit
19,000
5,000 hr. at
160,000 lb. at
142,500 lb.
8 lbs. at
0.25 hrs. at
19,000 units x
$
$
$
$
1.75 per lb
8.00 per hr.
8 lbs x
7.56
1.90
1.75
19,000 units x
=
=
=
=
=
=
0 hrs. x
(PQ
x
160,000
x
24,000 Unfavorable
(AQ
x
142,500
x
(16,625) Favorable
19,000 units
(AH
x
5,000
x
(2,200) Favorable
=
=
=
(AH
x
5,000
x
2,000 Unfavorable
19,000 units
8.00
AP)
1.90
SP)
1.75
=
=
=
8 lbs per unit
AR)
7.56
SR)
8.00
0 hrs per unit
=
=
(AH AR) (AH SR)

(36,500 $8.24*) (36,500 $8.20)
$1,460 Unfavorable
=
=
(AH SR) (SH SR)

(36,500 $8.20) (37,200* $8.20)
$5,740 Favorable
5,600 units 6 hours per unit
33,600 hours
800 units 75% 6 hours per unit
3,600 hours
37,200 hours
=
=
=
=
=
=
(AQ SP)
(SQ
(AQ SP)
$5.00)
$1,500
(51,200*
$5.00)
Unfavorable
$1,500
300
51,500
kilograms
5,600 units 8
kilograms
44,800
kilograms
800 units 8
kilograms
6,400
kilograms
51,200
kilograms
al:
Actual price =
=
$249,250/50,000
$4.985 per kilogram
d to finished goods:
Direct-material
cost transferred
Direct-labor
cost transferred
Total cost transferred
5,600 units $40

5,600 units $49.20
ber 30 balance of Work-in-Process Inventory:

Direct material
Direct labor
800 units $40 per unit

800 units 75% $49.20
Total cost in ending

Work-in-Process Inventory

Standard Cost of Production
For November
Standard Cost per Box
Quantity (boxes)
1,000
$106.50
1,700
106.50
1,200
90.48*
ndard cost of labor and overhead:
$106,400
104,500
$ 1,900

Direct-Material and Direct-Labor Variances
For November
Lot no.
22
23
1,000
1,700
24
24
24,000
24,100
100
$1.10
40,800
40,440
-360
$1.10
$110
$(396)
Lot no.
22
Direct-labor efficiency variance:
Standard hours:
Boxes in lot
1,000
Standard hours
per box
3
Total
3,000
Percentage of
completion
Total standard hours
3,000
Actual hours worked
Variance in hours*
23
1,700
3
5,100
100%
100%
5,100
2,980
-20
$14.70
($294)
5,130
30
$14.70
F
$441
Lot no.
22
2,980
23
5,130
24
2,890
vourable.
at is discussed in class
$ .30
$894
$ .30
$1,539
$ .30
$867
kilograms
per kilogram
SP)
0.80
SQ*)
200,000
4 kgs per unit

-
SR)
16.00
SH*)
12,500
0.25 hrs per unit
units
$
$
7.50
75.00
82.50
=
=
Standard
Costs
$
58,500
$ 585,000
$ 643,500
(PQ
12,500
x
x
(SQ*
11,700
x
x
SP)
$
5.00
SP)
$
5.00
11,700 lbs.
(AH
40,100
x
x
(SH*
39,000
x
x
SR)
15.00
SR)
15.00
U
U
U
U
U
U
F
U
39,000 hrs.
0.25
525
890
units
$
$
36.96
36.40
73.36
Standard
Costs
$ 351,120
$
$
345,800
696,920
(PQ
22,500
x
x
(SQ*
19,950
x
x
x
x
(SH*
24,700
x
x
14.00
2.00
16.00
SR)
14.00
SR)
14.00
24,700 hrs.
units
SP)
17.60
19,950 lbs.
(AH
20,900
SP)
17.60
Standard
Costs
$ 266,000
$
$
38,000
304,000
(PQ
160,000
x
x
(SQ*
152,000
x
x
1.75
SP)
$
1.75
152,000 lbs.
(AH
5,000
x
x
(SH*
4,750
x
x
SP)
SR)
8.00
SR)
8.00
4,750 hrs.
5,600 units $40
5,600 units $49.20
unit
$49.20
$224,000
275,520
$499,520
$32,000
29,520
$61,520
Cost per Box
Total Standard Cost
$106,500
181,050
108,576
$396,126
no.
24
Total
1,200
3,900
24
24
28,800
28,825
25
$1.10
93,600
93,365
-235
$1.10
$27.50
($258.50)
Lot no.
24
Total
1,200
3
3,600
80%
2,880
10,980
2,890
10
$14.70
11,000
20
$14.70
$147
24
$294
Total
11,000
$
.30
$3,300
EX-11-26
Actual
Actual
Actual
Actual
output
variable overhead (Actual VOH)
fixed overhead (actual FOH)
machine time
Standard variable-overhead rate

Standard quantity of machine hours
Budgeted fixed overhead (budgeted FOH)
Budgeted output
SOLUTION
1) Variable-overhead spending variance
2) Variable-overhead efficiency variance
* SH =
3) Fixed-overhead budget variance
Actual
Actual
Actual
Actual
output
labour hours

Standard quantity of labour hours
Budgeted output
SOLUTION
* SH =
Ex11-30
Standard machine hours per unit of output

Standard variable-overhead rate per machine hour
Actual variable-overhead rate per machine hour
Actual machine hours per unit of output
Budgeted fixed overhead
Actual fixed overhead
Budgeted production in units
Actual production in units
Variable-overhead spending variance
Variable-overhead efficiency variance
Fixed-overhead budget variance
Fixed-overhead volume variance
Total actual overhead
Total budgeted overhead (flexible budget)

Total budgeted overhead (static budget)
Total applied overhead
Ex 11-32
*SH = 56,000 units 5 hours per unit
*Budgeted fixed overhead = 300,000 hours $12 per hour

*Applied fixed overhead = $12 per hour 5 hours per unit 56,000 units
Ex 11-34
budgeted
actual
Sales-price variance sales
sales
price
price
$4,500 Unfavorable
($11.50* $12.00) 9,000 =
*$11.50 = $103,500 9,000
$12.00 = $120,000 10,000

Sales Margin volume variance is more relevant than sales volume varince
Sales Margin Volume variance= (Actual Sales volume- Budgeted Sales volume)
(9000-10000)*7
Actual
Actual
Actual
Actual
output
labour hours

Standard quantity of labour hours
Budgeted output
SOLUTION
* SH =
P11-36
P11-38
a.
b.
c.
d.
e.
1)2450
4)11800
Units produced during May

Overhead application rate per unit
(budgeted overhead per unit at expected level of
output)
Applied overhead costs
P11-41
1 $80,000
2 2310 Fav
5 42065 underapplied
P11-43
Units sold
Revenue
Variable cost
Contribution margin
Fixed overhead
Fixed general and adminstrative cost
Operating income
Unit costs:
Direct material
Direct labor
variable overhead
variable selling costs
Total variable costs:
Direct material
Direct labor
Variable overhead
Variable selling expenes
SOLUTION
1) Flexible budget for the month of May, based on 4,800 units, showing separate
Lawnmate Co
Flexibile Bu
For the Month
Revenue
Deduct: Variable costs:
Direct material
Direct labor
Variable overhead
Variable selling
Total variable costs
Contribution margin
Deduct: Fixed costs:
Fixed overhead
Fixed general and administrative

Operating income
2) Flexible-budget variances are as follows:
Lawnmate Co
Flexible-Budget
For the Month
Units
Revenue
Variable costs
Direct material
Direct labor
Variable overhead
Variable selling
Deduct: Total variable costs
Contribution margin
Fixed costs:
Fixed overhead
Fixed general and administrative
Deduct: Total fixed costs
Operating income
P11-44
Case A
2 $7.00a per hour
3 $9.50b per hour
6 $98,050c
9 $2,500 Ud
10 $3,000 Fe
11 $(42,000) (Negative)f (The negative sign means that

applied fixed overhead exceeded budgeted fixed
overhead.)
12 $8,050 underappliedg
13 $45,000 overappliedh
16 6,000 unitsi
19 $90,000j
20 $252,000k
P11-49
Containers (cases) of frozen food produced
Actual costs:
Variable overhead
Fixed overhead
Actual labor cost
Actual material cost
Standard costs per case:
Direct labor
Direct material
Variable overhead
Fixed overhead
Annual budget information

Variable overhead
Fixed overhead
Planned activity for year
SOLUTION
* AP
*SQ
*AR
* SH
* budgeted FOH
1 Standard machine hours per unit
2 Actual cost of direct material per unit
3 Standard direct-material cost per machine hour
4 Standard direct-labor cost per unit
5 Standard variable-overhead rate per machine hour
$647,200 - $627,000
$20,200
32,000 - 30,000
2,000 hours
6 First, continue using the high-low method to determine
total budgeted fixed overhead as follows:
Total budgeted overhead at 30,000 hours
Total budgeted variable overhead at 30,000 hours

(30,000 $10.10)
Total budgeted fixed overhead
Standard fixed-overhead rate per machine hour
7 First, compute actual variable overhead as follows:

Total actual overhead
Total fixed overhead (given)
Total variable overhead
8 Variable-overhead efficiency variance
*Standard allowed machine hours = 6,200 units 5

hours per unit
9 Fixed-overhead budget variance
EX11-52
Sales price variance
*Actual sales price = $240,000/5,000
Budgeted sales price = $300,000/6,000

2 Sales volume variance
=
=
Sales Margin volume variance
=
=
Ex11-53
Sales-Price
Variance
Business
Residential
Total
Sales-Volume
Variance
Business
Residential
Total
Case 11-54
1 Planned production = 5,000 units.
The reasoning is as follows:
(a)
Therefore, planned direct-labor hours (X) equals 10,000 hours.

(b)
2 Actual production
3 Actual fixed overhead

Fixed overhead
budget variance
$3,250 U
Therefore, actual fixed overhead (X) equals $43,250.
4 Total standard allowed direct-labor hours
5 Actual direct-labor rate

$8,800 U
6 Standard variable-overhead rate

7 Actual variable-overhead rate

$2,640 U
Therefore, AVR = $6.30 per hr.

8
Standard direct-material quantity

*Direct-material quantity variance
$6,000 U
SQ
9 standard fixed-overhead rate standard allowed hours

10
Applied fixed overhead
11
Case 11-55 Material Price variance

Type of Material
Cookie mix
Milk chocolate
Almonds
Total
Material quantity variance
Type of Material
Cookie mix
Milk chocolate
Almonds
Total
Labour rate variance
Labour efficiency variance
Type of Labor
Mixing
Baking
Total

actual variable overhead - (AH SVR)
= $750,000 - [(1,250,000*/60) $32.40]
= $75,000 U
*Total actual minutes of direct labor.
= SVR(AH - SH*)
= $32.40
1, 250,000 3 450,000
60
60
= $54,000 F
*SH = (3 minutes per unit, or pound 450,000 units, or pounds) 60 minutes

Sales-price variance
g.
= ($7.90* - $8.00) 450,000
= $45,000 U
*Actual sales price = $3,555,000 450,000 units s

Summary of variances:
Sales-price variance
Total
$
$
$
$
=
=
=
=
=
=
SVR
$
$
x
9.00
x
40,500 Unfavorable
9,000
actual FOH
$
122,000
$
2,000 Unfavorable
$
$
$
$
=
=
=
9.00
4
120,000
10,000
actual VOH
$
405,000
$
40,500 Unfavorable
36,000 hrs. =
=
=
=
9,000
405,000
122,000
40,500
20,000
320,000
99,000
50,000
6.10
2
100,000
25,000
actual VOH
$
320,000
$
15,000 Unfavorable
=
=
=
SVR
x
6.10
x
61,000 Unfavorable
$
$
40,000 hrs. =
=
=
=
$
$
20,000
actual FOH
99,000
(1,000) Favorable
4 hours
$8.00
$9.00b
3d
$50,000
$65,000a
25,000
24,000c
$72,000U
$192,000F
$15,000U
$2,000g(positive)
$713,000
$818,000e
$850,000f
$816,000
=
=
=
=
=
=
actual fixed overhead budgeted fixed overhead
=
=
$3,750,000 $3,600,000*
$150,000 U
2 per hour
=
=
=
budgeted fixed overhead applied fixed overhead

$3,600,000 $3,360,000*
$240,000 (positive)
rs per unit 56,000 units
ted
es
e
le
actual sales
volume
han sales volume varince
lume- Budgeted Sales volume)

X budgeted cContribution margin
7000 unfavouarable
$
$
$
$
80,000
511,500
860,000
165,000
3.00
2
900,000
90,000
=
=
=
actual VOH
$
511,500
$
16,500 Unfavorable
=
=
=
SVR
x
3.00
x
15,000 Unfavorable
$
$
160,000 hrs. =
=
=
=
80,000
actual FOH
$
860,000
$
(40,000) Favorable
66,000
$6
$396,000
$ 150
6,000
8,850
18,300
U*
U
F
Lawnmate Company
Operating Results
For the Month of May
Master Budget
5,000
$
$
Actual
4,800
1,200,000
760,000
440,000
180,000
140,000
120,000
$ 1,152,000
780,000
$
372,000
###
135,000
$
57,000
$
$
$
$
60
44
36
12
780,000
$
$
$
$
320,000
192,000
176,000
92,000
on 4,800 units, showing separate variable cost budget is as follows:

Lawnmate Company
Flexibile Budget
4,800
$ 1,200,000
4,800
4,800
4,800
4,800
x
x
x
x
Lawnmate Company
Flexible-Budget Variances
4,800
Flexible
Budget
4,800
1,152,000
$ 1,152,000
320,000
192,000
176,000
92,000
780,000
372,000
180,000
135,000
315,000
57,000
Actual
$
$
$
$
$
$
$
$
$
288,000
211,200
172,800
57,600
729,600
422,400
180,000
140,000
320,000
102,400
1
2
4
5
6
12
13
14
16
19
20
8,000 direct-labor hours

30,000 pounds purchased and used
5
20
5
5
=
=
=
hours at
pounds at
hours at
hours at
$
$
$
$
18.00
2.00
1.50
3.00
PQ
x
30,000
x
6,000 Unfavorable
=
=
=
=
66,000
SP
1,450
=
=
=
=
=
=
AH
x
8,000
x
7,200 Unfavorable
151,200
SR
$
$
=
=
=
=
x
2.00
x
2,000 Unfavorable
$
$
x
18.00
x
13,500 Unfavorable
1,450 units
actual VOH
$
11,000
$
(1,000) Favorable
=
=
=
SVR
x
1.50
x
1,125 Unfavorable
$
$
=
=
=
actual FOH
$
26,000
$
1,000 Unfavorable
300,000
budgeted machine hours
=
=
5 hours
perproduction
unit
budgeted
=
=
$56.94 per unit (rounded)
=
=
$11 per machine hour
=
=
$20,200
2,000 hours
$10.10 per
machine hour
$627,000
303,000
$324,000
=
$324,000
30,000 hours
$10.80 per hour
=
=
=
=
=
(AH SVR) (SH SVR)

(32,000
$10.10)
(31,000*
$10.10) =
$10,100
Unfavorable
=
=

$324,000
$324,000 = 0
=
=
(Actual sales price budgeted sales price) actual sale

($48* $50) 5,000 = $10,000 Unfavorable
(Actual sales volume budgeted sales volume) budgeted sales price

(5,000 6,000) $50 = $50,000 Unfavorable
(Actual sales volume budgeted sales volume) budgeted contribution margin

(5,000 6,000) $20 = $20,000 Unfavorable
Actual
Sales
Price
Budgeted
Sales
Price
$115
59
Price
Difference
$120
60
$5
1
Actual
Sales
Volume
Budgeted
Sales
Volume
74,000
86,000
80,000
120,000
Fixed-overhead rate pe
=
$4 per hr. =
10,000 hours.
Volume
Difference
6,000
34,000
budgeted fixed overhead

planned direct-labor hours
$40,000
X
ned direct-labor hours =

planned production standard hours per unit
10,000 hr. =
X 2 hr. per unit
Therefore, planned production (X) equals 5,000 units.
=
=
=
planned production 500 units

5,000 units 500 units
4,500 units
$43,250.00
X $40,000
4,500 units produced 2 hr. per unit

9,000 hr.
=
=
=
Therefore, AR = $15.
$6 per direct-labor hour.

$1,200 F
=
Therefore, SVR = $6 per hr.
$6.30 per direct-labor hour.
=
=
AH(AVR SVR)
8,800(AVR $6)
tandard direct-material quantity per unit

=
=
=
SP(AQ SQ)
$12(14,000 SQ)
13,500 kg.
PQ(AP SP)
14,000($13.50 $12.00)
$21,000 U
$4 per hr. 9,000 hr.

$36,000
=
=
=
budgeted fixed overhead applied fixed overhead
$40,000 $36,000
$4,000 (Positive)*
PQ*(AP+ - SP)
Variance
4,650,000($.02-$.02)
$0
2,660,000($.20-$.15) 133,000 U
480,000($.50-$.50)
0
$133,000 U
SP(AQ - SQ*)
$.02(4,650,0004,500,000)
$.15(2,660,0002,250,000)
$.50(480,000450,000)
Variance
$ 3,000 U
61,500 U
15,000 U
$79,500 U
ZERO
SR*(AH - SH+)
$.24(450,000450,000)
$.30(800,000900,000)
Variance
$0
30,000 F
$30,000 F
nits, or pounds) 60 minutes
actual
sales
price
budgeted
sales price
e = $3,555,000 450,000 units sold
$133,000 U
79,500 U
###
30,000 F
75,000 U
54,000 F
45,000 U
$248,500 U
actual
sales volume
cases
machine hours
per machine hour
hours per case of marshmallows
per month
cases per month
(AH
40,500
x
x
40,500
(AH
cases x
SVR)
$
9.00
SH*)
36,000
4 hrs per case

budgeted FOH
120,000
units
lab hours
per DL hour
hours per unit
units
(AH
50,000
x
x
SVR)
$
6.10
(AH
50,000
cases x
SH*)
40,000
2 hrs per case

budgeted FOH
100,000
actual variable overhead (AH SVR)

$2,340,000 (275,000 $8.00)
$140,000 U
SVR (AH SH)
$8.00 (275,000 280,000*)
$40,000 F
ad applied fixed overhead
actual
Sales- volume variance
budgeted
sales
volume
sales
volume
= (9,000 10,000) $12.00 = $12,000 Unfavorable
bution margin
units
lab hours
per DL hour
hours per unit
units
budgeted sales price
(AH
165,000
x
x
165,000
(AH
cases x
Company
g Results
nth of May
3.00
SH*)
160,000
2 hrs per case

budgeted FOH
SVR)
900,000
Variance
200 U
$
$
48,000
(20,000)
68,000
5,000
63,000
U
U
U
F
U
t is as follows:
$
$
$
$
5,000
60
44
36
12
=
=
=
=
288,000
211,200
172,800
57,600
180,000
140,000
Flexible-Budget
Variance
$
$
$
$
$
$
$
Case B
$4.00a per hour
$9.00b per hour
$6,400c
$18,000d
$8,000e
32,000
(19,200)
3,200
34,400
50,400
(50,400)
U
F
U
U
U
U
(5,000) F
(5,000) F
(45,400) U
$19,080f
$1,600 underappliedg
$4,680 underappliedh
1,000 unitsi
800 unitsj
$6,400k
$14,400l
1,450
t-labor hours
ds purchased and used
90.00
40.00
7.50
15.00
152.50
$
$
150,000
300,000
100,000 direct-labor hours
(AP*
$
11,000
26,000
151,200
66,000
2.20
SP)
$
2.00
30,000
30,000
(AQ
SQ*)
29,000
20 lbs. per unit =

(AR*
$
2.20
29,000
18.90
SR)
18.00
8,000
18.90
8,000
(AH
SH*)
7,250
5 hrs. per unit =

(AH
8,000
x
x
8,000
(AH
7,250
SVR)
1.50
SH)
7,250
budgeted FOH*
$
25,000
12
30,000
eted machine6,000
hours
rs
per
unit
geted production
4 per unit (rounded)
25,000
er machine hour
$252,000 $78
30,000
$273,000 $234,000
$84.50 per unit
6,000 units
$633,000
324,000
$309,000
Actual variable overhead (AH SVR)
$309,000 (32,000 $10.10)
$14,200 Favorable
al sales price budgeted sales price) actual sales volume

$50) 5,000 = $10,000 Unfavorable
me) budgeted sales price

30
me) budgeted contribution margin
Actual
Sales
Volume
SalesPrice
Variance
74,000 $370,000 U
86,000 86,000 U
$456,000 U
Budgeted Sales Price
SalesVolume
Variance
$120 $ 720,000 U
60 2,040,000 U
$2,760,000 U
geted fixed overhead

ned direct-labor hours
ed production standard hours per unit

hr. per unit
000 units.
500 units
2 hr. per unit
$15 per hour.

AH(AR SR)
8,800(AR $14)
SVR(AH SH)
SVR(8,800 9,000)
per direct-labor hour.
ad applied fixed overhead
udgeted
es price
actual
sales volume
budgeted sales price
$ 1,152,000
729,600
$
422,400
320,000
$
102,400
000 $78,000
30,000
=
=
=
total standard direct-material quatity allowed

actual production in units
13,500 kg. *
34,500
kg. units
quatity allowed
units

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P5-46

1. Unit manufacturing costs:

Total cost per unit

1. Overhead to be assigned to Nitrogen Plus order:

Assigned Overhead Cos

2. Overhead cost per box of chemicals

3. Predetermined overhead rate

4. Overhead to be assigned given a single predetermined overhead rate:

a. Total overhead assigned

b. Overhead cost per box

cost per unit

the total contribution margin expected from the HD board is $2,760,000.

see textbook for solution

1 a)Total Manufacturing Department

Tuff Stuff unit cost

Direct-labor rate: $800,000 per 100,000

3 Tuff Stuff unit cost

igned Overhead Cost

See next sheet for 5-50

Cost per model

Gross margin per unit

3 Allocation based on ABC

Target price based on new

Profit based on ABC cost

Cost Driver Base

Budgeted levelCost driver rate

Cost Driver Rate

2 Purchase price quoted

Total variable cost

Kaytell's counter offer

Add:minimum contribution required

Labour hours reqd.

Increase/ decrease in contribution

Segment Contribution net effect

Contibution per labor $

Total unit variable cost

The following costs are not relevant to the

Less: Marketing and advertising

2500 medals ordered

$175 x 7500 units = $1312500

Total variable cost

Contribution margin per unit

Less: rental revenue from idle space

Net cost of using limited capacity to produce

*Calculation of variable overhead per unit:

17500 skate boards

The optimal use of Sportways available

Net contribution to profit

Required machine hours (11,000 units x .5)

Incremental contribution margin

Linear programming problems not relevant for the exam

e same order as in the book but numbered correctly

Losses/ additional exp

10000 medals per month

Current Monthly Production

$18.75 $15.00 = 1.25 hours

unit for distribution must be deducted

2. Cash collections in 4th quarter from credit sales in 4th quarter:

Professional services in June:

1/2 hour visits

Raw material required for production (board f

Production (in units) required for the year: