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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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Flexible Budgets and StandardCost 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

  • ExercisePage

  • E23-15 1451 Flexible Budget


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.


Flexible Budget

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





Flexible Budget

First two volume levels have the same fixed costs.


Flexible Budget

Fixed costs increase at the 75,000 volume level.



Flexible Budget

End of Exercise


Material & Labor Variances

  • In-Class Exercises:

    Exercise No.Page

    E23-19 1452 Material & Labor Variances


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.


Material & Labor Variances

Direct Material Variances


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)


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)


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)


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)


Direct Material Variances

General Model Method





Material & Labor Variances

Direct Labor Variances


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 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)


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)


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)


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)


Direct Labor Variances

General Model Method



Direct Labor Variances

Formula Method



Direct Labor Variances

End of Exercise


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