Fundamentals Of Cost Accounting (6th Edition)
6th Edition
ISBN: 9781259969478
Author: WILLIAM LANEN, Shannon Anderson, Michael Maher
Publisher: McGraw Hill Education
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Chapter 16, Problem 27E
Prepare Flexible Budget
Osage, Inc., manufactures and sells lamps. The company produces only when it receives orders and, therefore, has no inventories. The following information is available for the current month:
Required
Prepare a flexible budget for Osage, Inc.
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Preparing a flexible budget performance report
Cell One Technologies manufactures capacitors for cellular base stations and other communications applications. The company’s July 2018 flexible budget shows output levels of 6,000, 7,500, and 9,500 units. The static budget was based on expected sales of 7,500 units.
The company sold 9,500 units during July, and its actual operating income was as follows:
Requirements
Prepare a flexible budget performance report for July.
What was the effect on Cell One’s operating income of selling 2,000 units more than the static budget level of sales?
What is Cell One’s static budget variance for operating income?
Explain why the flexible budget performance report provides more useful information to Cell One’s managers than the simple static budget variance. What insights can Cell One’s managers draw from this performance report?
Cymbal E-Motors is a fast-growing start-up firm that manufactures electric motors for bicycles. The following income statement is
available for April:
Sales revenue (790 units @ $1,100 per unit)
Less
Manufacturing costs
Variable costs
Depreciation (fixed)
Marketing and administrative costs
Fixed costs (cash)
Depreciation (fixed)
Total costs
Operating profits
$ 869,000
60,400
53,000
Required:
Prepare a budgeted income statement for May.
Note: Do not round intermediate calculations.
124,000
61,000
$ 298,400
$ 570,600
Sales volume is expected to increase by 30 percent in May, but the sales price is expected to fall 5 percent. Variable manufacturing
costs are expected to increase by 7.5 percent per unit in May. In addition to these cost changes, variable manufacturing costs also will
change with sales volume. Marketing and administrative cash costs are expected to increase by 15 percent.
All revenues and costs at Cymbal are cash transactions, except for depreciation. Cymbal maintains no…
Flexible Budget for Selling and Administrative Expenses for
a Service Company
Digital Solutions Inc. uses flexible budgets that are based
on the following data:
Sales commissions
Advertising expense
Miscellaneous administrative expense
Office salaries expense
Customer support expenses
Research and development expense
Prepare a flexible selling and administrative expenses
budget for October for sales volumes of $400,000,
$500,000, and $600,000. (Use Exhibit 5 as a model.)
Digital Solutions Inc.
Flexible Selling and Administrative
Expenses Budget
For the Month Ending October 31
Total sales
Variable cost:
Total variable cost
Fixed cost:
Total fixed cost
Total selling and administrative expenses
14% of sales
18% of sales
$5,500 per month plus 12% of sales
$28,000 per month
$12,000 per month plus 20% of sales
$30,000 per month
$400,000 $500,000 $600,000
$
$
$
$
Chapter 16 Solutions
Fundamentals Of Cost Accounting (6th Edition)
Ch. 16 - What are the advantages of the contribution margin...Ch. 16 - How can a budget be used for performance...Ch. 16 - The flexible budget for coats it computed by...Ch. 16 - A flexible budget is: a. Appropriate for control...Ch. 16 - What is the standard cost sheet?Ch. 16 - What is the basic difference between a mailer...Ch. 16 - Standards and budgets are the same thing. True or...Ch. 16 - Actual direct materials costs differ from the...Ch. 16 - Fixed cost variances are computed differently from...Ch. 16 - What is the advantage of preparing the flexible...
Ch. 16 - What is the link between flexible budgeting and...Ch. 16 - Actual revenues are greater than budgeted for...Ch. 16 - Pick an organization you know, such as a school,...Ch. 16 - Give two reasons why dividing production cost...Ch. 16 - Prob. 15CADQCh. 16 - My firm has a wage contract with the union....Ch. 16 - Prob. 17CADQCh. 16 - The production volume variance should be charged...Ch. 16 - Prob. 19CADQCh. 16 - Prob. 20CADQCh. 16 - Flexible Budgeting The master budget at Western...Ch. 16 - Sales Activity Variance Refer to the data in...Ch. 16 - Profit Variance Analysis Refer to the data in...Ch. 16 - Flexible Budget Given the data shown in the...Ch. 16 - Fill in Amounts on Flexible Budget Graph Fill in...Ch. 16 - Flexible Budget Label (a) and (b) in the graph and...Ch. 16 - Prepare Flexible Budget Osage, Inc., manufactures...Ch. 16 - Sales Activity Variance Refer to the data in...Ch. 16 - Profit Variance Analysis Use the information from...Ch. 16 - Sales Activity Variance The following data are...Ch. 16 - Sales Activity Variance Selected data for October...Ch. 16 - Prob. 32ECh. 16 - Prob. 33ECh. 16 - Prob. 34ECh. 16 - Prob. 35ECh. 16 - Prob. 36ECh. 16 - Prob. 37ECh. 16 - Variable Cost Variances The following data reflect...Ch. 16 - Variable Cost Variances The records of Norton,...Ch. 16 - (Appendix used in requirement [b]) Variable Cost...Ch. 16 - (Appendix used in requirement [b]) Variable Cost...Ch. 16 - Fixed Cost Variances Information on Carney...Ch. 16 - Prob. 43ECh. 16 - Prob. 44ECh. 16 - Fixed Cost Variances Mint Company applies fixed...Ch. 16 - Prob. 46ECh. 16 - Prob. 47ECh. 16 - (Appendix used in requirement [c]) Comprehensive...Ch. 16 - Comprehensive Cost Variance Analysis NSF Lube is a...Ch. 16 - Overhead Variances Brice Corporation shows the...Ch. 16 - Solve for Master Budget Given Actual Results A new...Ch. 16 - Find Missing Data for Profit Variance Analysis...Ch. 16 - Find Data for Profit Variance Analysis Required...Ch. 16 - Prob. 54PCh. 16 - Prepare Flexible Budget Odessa, Inc., reports the...Ch. 16 - Prob. 56PCh. 16 - Prob. 57PCh. 16 - Prob. 58PCh. 16 - Prob. 59PCh. 16 - Prob. 60PCh. 16 - Direct Materials Information about direct...Ch. 16 - Prob. 62PCh. 16 - Prob. 63PCh. 16 - Prob. 64PCh. 16 - Overhead Cost and Variance Relationships...Ch. 16 - Prob. 66PCh. 16 - Prob. 67PCh. 16 - Ethics and Standard Costs Farmer Franks produces...Ch. 16 - Comprehensive Variance Problem The standard cost...Ch. 16 - Prob. 70PCh. 16 - Find Actual and Budget Amounts from Variances JW...Ch. 16 - Variance Computations with Missing Data The...Ch. 16 - Comprehensive Variance Problem Sweetwater Company...Ch. 16 - Prob. 74PCh. 16 - Prob. 75PCh. 16 - Keewee Company manufactures a single product for...
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