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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

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slide2

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)

slide3

Flexible Budget

  • ExercisePage
  • E23-15 1451 Flexible Budget
slide4

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.

slide5

Flexible Budget

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

slide9

Flexible Budget

First two volume levels have the same fixed costs.

slide10

Flexible Budget

Fixed costs increase at the 75,000 volume level.

slide12

Flexible Budget

End of Exercise

slide13

Material & Labor Variances

  • In-Class Exercises:

Exercise No.Page

E23-19 1452 Material & Labor Variances

slide14

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.

slide15

Material & Labor Variances

Direct Material Variances

slide16

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)
slide17

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)

slide18

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)
slide19

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)
slide20

Direct Material Variances

General Model Method

slide24

Material & Labor Variances

Direct Labor Variances

slide25

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.

slide26

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)
slide27

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)

slide28

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)
slide29

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)
slide30

Direct Labor Variances

General Model Method

slide34

Direct Labor Variances

End of Exercise

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