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- In-Class Exercises:

Exercise No.Page

E23-15 1451 Flexible Budget

(Use the format, as reflected on the next slide, to complete the exercise)

- ExercisePage
- E23-15 1451 Flexible Budget

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

First two volume levels have the same fixed costs.

Fixed costs increase at the 75,000 volume level.

End of Exercise

- In-Class Exercises:

Exercise No.Page

E23-19 1452 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 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)

- 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)

- 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)

- 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)

General Model Method

Formula Method

Direct 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.

- 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)

- 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)

- 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)

- 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)

General Model Method

Formula Method

End of Exercise

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