This document summarizes exercises from Chapter 12 of Cost Accounting, 9th Edition. It includes 11 exercises covering topics like work-in-process, overhead application rates, fixed and variable overhead rates, normal and actual capacity, budgeted and actual overhead, and overhead variances including spending and idle capacity variances. Calculations are shown for overhead application, budgeting, and analyzing variances at different production capacity levels.
Solution Chapter 3 l Cost Accounting Planning and Control by Matz.Hammer an...Bushra Sultana Malik
This document contains 9 journal entries related to the manufacturing cost accounting cycle for 3 jobs. It records materials, labor, and overhead being charged to Work in Process accounts for each job. It also records payroll expenses and taxes, and the application of overhead to production using a predetermined overhead rate of 80%.
The document provides information and examples related to cost accounting, including:
1) Exercises calculating cost of goods manufactured, cost of goods sold, prime cost, conversion cost, and total variable cost.
2) Journal entries for the manufacturing cost accounting cycle.
3) Cost of goods manufactured and cost of goods sold statements for multiple companies.
This document contains examples and problems related to manufacturing costs and cost of goods sold calculations. It includes journal entries, income statements, and calculations for direct material costs, direct labor costs, factory overhead costs, work in process, finished goods, and cost of goods sold. Manufacturing costs are calculated and allocated to inventory and cost of goods sold using absorption costing. Variances between applied and actual overhead are also accounted for.
Solution Manual Cost Accounting Planning and Control by Matz.Hammer and Usry ...Bushra Sultana Malik
This Solution manual Cost Accounting Planning and Control.
Chapter 3 is not Complete.But The Complete chapter is Uploaded See my other Uploads,Chapter 3 Problems are Available.
This document contains exercises and problems related to cost accounting concepts like economic order quantity, reorder point, safety stock, and ABC analysis. Exercise 8.1 provides production scheduling details. Exercise 8.2 calculates order quantities based on forecast demand. Other exercises calculate EOQ, carrying costs, order costs under different scenarios. Problems calculate optimal order size, number of production runs, economic order quantity, and reorder point considering usage patterns and costs.
The document outlines the calculation of cost of goods sold (COGS) by detailing opening and closing inventory amounts for materials and finished goods, purchases and returns, direct materials consumed, cost of goods manufactured, prime costs including direct materials and labor, conversion costs including labor and factory overhead, total manufacturing costs, and the final calculation of COGS by adding opening finished goods inventory and subtracting closing finished goods inventory from the cost of goods manufactured.
The document provides an income statement and schedule of cost of goods manufactured for Chan Corporation for the year ended December 31, 2004. It shows revenues of $350 million and cost of goods sold of $232 million, resulting in a gross margin of $118 million. Cost of goods manufactured was $204 million. The schedule breaks down the costs into direct material costs of $105 million, direct manufacturing labor costs of $40 million, and indirect manufacturing costs of $51 million, for total manufacturing costs of $196 million.
Solution Chapter 3 l Cost Accounting Planning and Control by Matz.Hammer an...Bushra Sultana Malik
This document contains 9 journal entries related to the manufacturing cost accounting cycle for 3 jobs. It records materials, labor, and overhead being charged to Work in Process accounts for each job. It also records payroll expenses and taxes, and the application of overhead to production using a predetermined overhead rate of 80%.
The document provides information and examples related to cost accounting, including:
1) Exercises calculating cost of goods manufactured, cost of goods sold, prime cost, conversion cost, and total variable cost.
2) Journal entries for the manufacturing cost accounting cycle.
3) Cost of goods manufactured and cost of goods sold statements for multiple companies.
This document contains examples and problems related to manufacturing costs and cost of goods sold calculations. It includes journal entries, income statements, and calculations for direct material costs, direct labor costs, factory overhead costs, work in process, finished goods, and cost of goods sold. Manufacturing costs are calculated and allocated to inventory and cost of goods sold using absorption costing. Variances between applied and actual overhead are also accounted for.
Solution Manual Cost Accounting Planning and Control by Matz.Hammer and Usry ...Bushra Sultana Malik
This Solution manual Cost Accounting Planning and Control.
Chapter 3 is not Complete.But The Complete chapter is Uploaded See my other Uploads,Chapter 3 Problems are Available.
This document contains exercises and problems related to cost accounting concepts like economic order quantity, reorder point, safety stock, and ABC analysis. Exercise 8.1 provides production scheduling details. Exercise 8.2 calculates order quantities based on forecast demand. Other exercises calculate EOQ, carrying costs, order costs under different scenarios. Problems calculate optimal order size, number of production runs, economic order quantity, and reorder point considering usage patterns and costs.
The document outlines the calculation of cost of goods sold (COGS) by detailing opening and closing inventory amounts for materials and finished goods, purchases and returns, direct materials consumed, cost of goods manufactured, prime costs including direct materials and labor, conversion costs including labor and factory overhead, total manufacturing costs, and the final calculation of COGS by adding opening finished goods inventory and subtracting closing finished goods inventory from the cost of goods manufactured.
The document provides an income statement and schedule of cost of goods manufactured for Chan Corporation for the year ended December 31, 2004. It shows revenues of $350 million and cost of goods sold of $232 million, resulting in a gross margin of $118 million. Cost of goods manufactured was $204 million. The schedule breaks down the costs into direct material costs of $105 million, direct manufacturing labor costs of $40 million, and indirect manufacturing costs of $51 million, for total manufacturing costs of $196 million.
1. The document contains 11 examples of cost of production reports from various departments. Each example provides information on quantities, costs added, and how costs are accounted for units completed, work in process, and any abnormal losses or spoilage.
2. Key details in the reports include quantity schedules showing units received, completed, in process, and lost; costs charged by the department broken down by material, labor, overhead; and equivalent production calculations.
3. The examples demonstrate how to prepare cost of production reports and account for costs in different scenarios involving normal and abnormal losses, spoilage, and addition of materials.
The document contains several accounting questions related to consolidated financial statements. It provides the individual balance sheets of companies P and S, and asks the reader to prepare a consolidated balance sheet by eliminating intra-group transactions and accounting for non-controlling interests. The questions require calculating goodwill on acquisition, adjusting assets to fair value on acquisition, and accounting for deferred consideration and loans between the parent and subsidiary.
Cost accounting: a project on cost analysis & budgetingRifat Hossain Khan
This is a project i worked with 3 other students. This project deals with the analysis of costs of manufacturing, pricing, budgeting. The product that we have chosen was Wooden Hanger.
Standards are benchmarks used to measure performance. In managerial accounting, standards relate to the quantity and cost of inputs used in production. Quantity standards specify the amount of inputs needed, while cost standards specify the price paid per input unit. Variance analysis involves comparing actual performance to standards, analyzing differences, and taking corrective actions. Manufacturing companies develop detailed standard costing systems with standards for materials, labor, and overhead for each product. Standards are set through collaboration between different departments and by reviewing past production records. Material, labor, and overhead variances are calculated by comparing actual inputs and costs to standards. Variances identify where costs differ from standards so issues can be addressed.
Process costing explained with examples free of cost .It is for students of managerial accounting ,read this to quickly go through process costing.
http://www.brightscholarships.com
Twitter @scholarshipskys
This document presents information about cost-volume-profit (CVP) analysis for Racing Bicycle Company. It includes CVP graphs and equations, contribution margin calculations, and analyses of break-even points and margin of safety. Specifically, it shows that Racing Bicycle's break-even point is at 400 units of sales for $200,000 in revenue, and its margin of safety given actual sales of 500 units is $50,000 or 20% of sales.
Chapter 6 Connect Quiz (Variable Costing and Segment Reporting:Tools for Mana...Emily Bauer
1. Aaker Corporation reported a total contribution margin of $198,000 for the most recent month. The contribution margin was calculated as (Selling Price - Variable Costs) x Units Sold.
2. Meyer Corporation reported total fixed expenses of $78,000. This was calculated by adding the traceable fixed expenses of $45,000 and the common fixed expenses of $33,000.
3. For a manufacturing company, the absorption costing unit product cost for the month was $96 per unit. This was calculated by taking the variable costs per unit plus the fixed manufacturing overhead costs allocated on a per unit basis.
This document discusses key concepts related to demand, including that demand is the amount of a good consumers are willing and able to buy at a given price. It also covers the law of demand, which states that as price increases, quantity demanded decreases, and vice versa. Additionally, it explains the concepts of income and substitution effects, marginal utility, and diminishing marginal utility in relation to demand. An example demand schedule for a TV at different future price points is also provided.
This document discusses the calculation and analysis of variances in overhead costs. It begins with an introduction to variance analysis and classification of variances as favorable or unfavorable. It then describes the different types of overhead variances including variable overhead variances, fixed overhead variances, and combined overhead variances. Specific formulas are provided for calculating the variable overhead cost variance, variable overhead expenditure variance, fixed overhead cost variance, and other overhead variances. An example is also shown to illustrate the calculation of a variable overhead expenditure variance.
This document contains solutions to problems from Chapter 7 on stock valuation. Problem P7-1 discusses authorized and available shares. Problem P7-2 covers preferred dividends for noncumulative and cumulative preferred stock. Problem P7-3 tests understanding of preferred dividends in arrears. Problem P7-4 involves valuation of convertible preferred stock.
High Low Method is a technique to split fixed and variable cost that are part of mixed costs from the given data. In cost accounting, it clearly means of computing the fixed cost and variable cost by using the value of highest and lowest levels of activity from the data in a given time of period and comparing the total costs at each level. Copy the link given below and paste it in new browser window to get more information on High Low Method:- http://www.transtutors.com/homework-help/accounting/high-low-method.aspx
Budget: 8.Budget di Cassa e delle EntrateManager.it
The document presents a cash budget for Royal over the quarter including beginning and ending cash balances, cash collections and disbursements, and financing activities. It shows a cash deficiency in April requiring Royal to borrow $50,000 at 16% interest, with enough cash by June to repay the $50,000 loan plus $2,000 in interest.
This document provides examples and explanations of break even analysis and cost-volume-profit analysis concepts. It defines key terms like contribution margin, break even point, margin of safety, and fixed and variable costs. It then works through multiple numerical examples calculating values like break even sales, units, and profits under various cost and sales assumptions. The examples illustrate how to use the analysis techniques to determine operating results at different production volumes and aid decision making.
1. Calculate contribution margin per customer as average revenue ($8) minus average variable cost ($3), which is $5.
2. Calculate break-even point in customers as fixed costs ($450,000) divided by contribution margin per customer ($5), which is 90,000 customers.
3. Calculate taxable income as contribution margin ($5 per customer) times number of customers minus fixed costs ($450,000).
4. Calculate income taxes as 30% of taxable income.
5. Calculate net income as taxable income minus income taxes.
Analysis of Financial statements of ABC IncLovneet Singh
A financial statement is a quantitative way of showing a company's financial performance and position. It includes 4 main statements: the income statement shows revenues, expenses and profits; the statement of retained earnings shows changes in retained profits; the balance sheet shows assets, liabilities and equity at a point in time; and the statement of cash flows shows cash inflows and outflows from operating, investing and financing activities.
The document summarizes key concepts from a chapter on cost-volume-profit (CVP) analysis. It covers CVP assumptions and terminology, essential features of CVP analysis including determining the break-even point, incorporating income taxes into CVP, using CVP for decision making and sensitivity analysis, and adapting CVP for alternative cost structures. Examples are provided to illustrate calculating break-even units and revenues, conducting sensitivity analysis using spreadsheets, and evaluating different rental options for a software company using CVP analysis.
Cost Volume Profit (CVP).
Introduction
Fixed costs
Variable costs
Semi variable costs
Contribution margin
Break even point
PV Ratio
BEP ANalysis.
break even point
Cost-volume-Profit.
This document contains solutions to problems involving capital budgeting techniques. Problem P9-11 involves calculating the internal rate of return (IRR) for three projects - Project A has an IRR of 17%, Project B has an IRR between 8-9% (calculator solution of 8.62%), and Project C has an IRR between 25-26% (calculator solution of 25.41%). The IRR is the discount rate that makes the net present value of cash flows equal to zero. It is found by iteration or using a financial calculator.
Flexible budgets allow overhead costs to vary based on changes in activity levels. They separate fixed and variable costs. Variable costs change proportionally with activity, while fixed costs remain constant within the relevant range. The document demonstrates how to prepare a flexible budget for CheeseCo based on machine hours. It also shows a budget performance report that calculates variances between the flexible budget and actual results to analyze performance. Most of the $11,650 total variance was due to lower activity levels, while $3,350 was due to poor cost control of variable overhead costs.
Flexible budget (Management Accounting)Abdul Basit
The document discusses flexible budgets and how they can be used to more accurately evaluate performance when actual activity levels differ from planned levels. It provides an example of preparing a flexible budget for the Cheese Company, including calculating variable and fixed costs at different activity levels. A flexible budget performance report is then shown comparing the flexible budget to actual results at the achieved activity level of 8,000 machine hours. This identifies variances in variable costs due to differences in activity levels versus poor cost control.
1. The document contains 11 examples of cost of production reports from various departments. Each example provides information on quantities, costs added, and how costs are accounted for units completed, work in process, and any abnormal losses or spoilage.
2. Key details in the reports include quantity schedules showing units received, completed, in process, and lost; costs charged by the department broken down by material, labor, overhead; and equivalent production calculations.
3. The examples demonstrate how to prepare cost of production reports and account for costs in different scenarios involving normal and abnormal losses, spoilage, and addition of materials.
The document contains several accounting questions related to consolidated financial statements. It provides the individual balance sheets of companies P and S, and asks the reader to prepare a consolidated balance sheet by eliminating intra-group transactions and accounting for non-controlling interests. The questions require calculating goodwill on acquisition, adjusting assets to fair value on acquisition, and accounting for deferred consideration and loans between the parent and subsidiary.
Cost accounting: a project on cost analysis & budgetingRifat Hossain Khan
This is a project i worked with 3 other students. This project deals with the analysis of costs of manufacturing, pricing, budgeting. The product that we have chosen was Wooden Hanger.
Standards are benchmarks used to measure performance. In managerial accounting, standards relate to the quantity and cost of inputs used in production. Quantity standards specify the amount of inputs needed, while cost standards specify the price paid per input unit. Variance analysis involves comparing actual performance to standards, analyzing differences, and taking corrective actions. Manufacturing companies develop detailed standard costing systems with standards for materials, labor, and overhead for each product. Standards are set through collaboration between different departments and by reviewing past production records. Material, labor, and overhead variances are calculated by comparing actual inputs and costs to standards. Variances identify where costs differ from standards so issues can be addressed.
Process costing explained with examples free of cost .It is for students of managerial accounting ,read this to quickly go through process costing.
http://www.brightscholarships.com
Twitter @scholarshipskys
This document presents information about cost-volume-profit (CVP) analysis for Racing Bicycle Company. It includes CVP graphs and equations, contribution margin calculations, and analyses of break-even points and margin of safety. Specifically, it shows that Racing Bicycle's break-even point is at 400 units of sales for $200,000 in revenue, and its margin of safety given actual sales of 500 units is $50,000 or 20% of sales.
Chapter 6 Connect Quiz (Variable Costing and Segment Reporting:Tools for Mana...Emily Bauer
1. Aaker Corporation reported a total contribution margin of $198,000 for the most recent month. The contribution margin was calculated as (Selling Price - Variable Costs) x Units Sold.
2. Meyer Corporation reported total fixed expenses of $78,000. This was calculated by adding the traceable fixed expenses of $45,000 and the common fixed expenses of $33,000.
3. For a manufacturing company, the absorption costing unit product cost for the month was $96 per unit. This was calculated by taking the variable costs per unit plus the fixed manufacturing overhead costs allocated on a per unit basis.
This document discusses key concepts related to demand, including that demand is the amount of a good consumers are willing and able to buy at a given price. It also covers the law of demand, which states that as price increases, quantity demanded decreases, and vice versa. Additionally, it explains the concepts of income and substitution effects, marginal utility, and diminishing marginal utility in relation to demand. An example demand schedule for a TV at different future price points is also provided.
This document discusses the calculation and analysis of variances in overhead costs. It begins with an introduction to variance analysis and classification of variances as favorable or unfavorable. It then describes the different types of overhead variances including variable overhead variances, fixed overhead variances, and combined overhead variances. Specific formulas are provided for calculating the variable overhead cost variance, variable overhead expenditure variance, fixed overhead cost variance, and other overhead variances. An example is also shown to illustrate the calculation of a variable overhead expenditure variance.
This document contains solutions to problems from Chapter 7 on stock valuation. Problem P7-1 discusses authorized and available shares. Problem P7-2 covers preferred dividends for noncumulative and cumulative preferred stock. Problem P7-3 tests understanding of preferred dividends in arrears. Problem P7-4 involves valuation of convertible preferred stock.
High Low Method is a technique to split fixed and variable cost that are part of mixed costs from the given data. In cost accounting, it clearly means of computing the fixed cost and variable cost by using the value of highest and lowest levels of activity from the data in a given time of period and comparing the total costs at each level. Copy the link given below and paste it in new browser window to get more information on High Low Method:- http://www.transtutors.com/homework-help/accounting/high-low-method.aspx
Budget: 8.Budget di Cassa e delle EntrateManager.it
The document presents a cash budget for Royal over the quarter including beginning and ending cash balances, cash collections and disbursements, and financing activities. It shows a cash deficiency in April requiring Royal to borrow $50,000 at 16% interest, with enough cash by June to repay the $50,000 loan plus $2,000 in interest.
This document provides examples and explanations of break even analysis and cost-volume-profit analysis concepts. It defines key terms like contribution margin, break even point, margin of safety, and fixed and variable costs. It then works through multiple numerical examples calculating values like break even sales, units, and profits under various cost and sales assumptions. The examples illustrate how to use the analysis techniques to determine operating results at different production volumes and aid decision making.
1. Calculate contribution margin per customer as average revenue ($8) minus average variable cost ($3), which is $5.
2. Calculate break-even point in customers as fixed costs ($450,000) divided by contribution margin per customer ($5), which is 90,000 customers.
3. Calculate taxable income as contribution margin ($5 per customer) times number of customers minus fixed costs ($450,000).
4. Calculate income taxes as 30% of taxable income.
5. Calculate net income as taxable income minus income taxes.
Analysis of Financial statements of ABC IncLovneet Singh
A financial statement is a quantitative way of showing a company's financial performance and position. It includes 4 main statements: the income statement shows revenues, expenses and profits; the statement of retained earnings shows changes in retained profits; the balance sheet shows assets, liabilities and equity at a point in time; and the statement of cash flows shows cash inflows and outflows from operating, investing and financing activities.
The document summarizes key concepts from a chapter on cost-volume-profit (CVP) analysis. It covers CVP assumptions and terminology, essential features of CVP analysis including determining the break-even point, incorporating income taxes into CVP, using CVP for decision making and sensitivity analysis, and adapting CVP for alternative cost structures. Examples are provided to illustrate calculating break-even units and revenues, conducting sensitivity analysis using spreadsheets, and evaluating different rental options for a software company using CVP analysis.
Cost Volume Profit (CVP).
Introduction
Fixed costs
Variable costs
Semi variable costs
Contribution margin
Break even point
PV Ratio
BEP ANalysis.
break even point
Cost-volume-Profit.
This document contains solutions to problems involving capital budgeting techniques. Problem P9-11 involves calculating the internal rate of return (IRR) for three projects - Project A has an IRR of 17%, Project B has an IRR between 8-9% (calculator solution of 8.62%), and Project C has an IRR between 25-26% (calculator solution of 25.41%). The IRR is the discount rate that makes the net present value of cash flows equal to zero. It is found by iteration or using a financial calculator.
Flexible budgets allow overhead costs to vary based on changes in activity levels. They separate fixed and variable costs. Variable costs change proportionally with activity, while fixed costs remain constant within the relevant range. The document demonstrates how to prepare a flexible budget for CheeseCo based on machine hours. It also shows a budget performance report that calculates variances between the flexible budget and actual results to analyze performance. Most of the $11,650 total variance was due to lower activity levels, while $3,350 was due to poor cost control of variable overhead costs.
Flexible budget (Management Accounting)Abdul Basit
The document discusses flexible budgets and how they can be used to more accurately evaluate performance when actual activity levels differ from planned levels. It provides an example of preparing a flexible budget for the Cheese Company, including calculating variable and fixed costs at different activity levels. A flexible budget performance report is then shown comparing the flexible budget to actual results at the achieved activity level of 8,000 machine hours. This identifies variances in variable costs due to differences in activity levels versus poor cost control.
Management Accounting (Flexible budget)Abdul Basit
A flexible budget is a budget that adjusts or flexes for changes in the volume of activity. The flexible budget is more sophisticated and useful than a static budget, which remains at one amount regardless of the volume of activity.
- The document discusses static and flexible budgets and how flexible budgets improve performance evaluation by accounting for actual activity levels.
- It provides an example of CheeseCo's static budget analysis which shows favorable cost variances but does not indicate whether good cost control or lower activity caused the variance.
- To determine this, a flexible budget is created for CheeseCo's actual activity level of 8,000 machine hours. This reveals an unfavorable cost control variance of $3,350, indicating costs were not well controlled.
The document summarizes standard costing and variance analysis.
Standard costing involves setting standard costs for direct materials, direct labor, and factory overhead based on expected efficiencies. Variances measure the difference between actual and standard costs. There are variances for direct material price and usage, direct labor rate and efficiency, and factory overhead which includes a controllable variance and volume variance. Variance analysis identifies reasons for differences to improve performance.
Manufacturing cost accounting ppt @ mba financeBabasab Patil
The document provides an overview of manufacturing cost accounting concepts and calculations including job order costing, activity based costing, standard costs, and flexible budgets. It discusses calculating product costs, contribution margin, breakeven analysis, master budget components including direct materials budget, labor variances, and flexible budget performance reports. The key information covered relates to accounting for costs in a manufacturing environment.
Managerial Accounting Garrison Noreen Brewer Chapter 10Asif Hasan
The document discusses static budgets and flexible budgets. A static budget is prepared for a single planned activity level and is difficult to use for performance evaluation when actual activity differs. A flexible budget can be prepared for multiple activity levels and allows for "apples-to-apples" cost comparisons at the actual activity level. The document provides an example of CheeseCo preparing both a static budget and flexible budget to evaluate performance when actual activity was lower than planned. Variances are identified to determine whether favorable cost variances were due to lower activity or good cost control.
3. Analisi delle Spese Generali e Budget FlessibileManager.it
The document discusses overhead rates and overhead variances. It provides an example of a company, ColaCo, that prepared a budget for overhead including variable and fixed overhead rates. It then demonstrates how to calculate variable and fixed overhead variances based on the budgeted overhead rates and actual results. Variable overhead variances include a spending variance and efficiency variance. Fixed overhead variances include a budget variance and volume variance. Formulas and explanations are provided for each type of overhead variance.
The document discusses manufacturing overhead variance calculations. It provides examples of calculating total, controllable, and volume variances given actual overhead costs, standard hours, budgeted overhead amounts, normal capacity hours and production levels. The total variance is the difference between actual overhead and applied overhead. The controllable variance is the difference between actual and budgeted overhead. The volume variance is based on fixed overhead rates and the difference between normal and actual capacity.
This document provides an overview of flexible budgets and overhead analysis. It begins by explaining the limitations of static budgets when actual activity levels differ from planned levels. It then introduces flexible budgets, which can be prepared for multiple activity levels, allowing for better performance evaluation. An example is provided of preparing a flexible budget for CheeseCo based on machine hours. Variances are calculated by comparing actual results to the flexible budget prepared for the actual level of activity. This reveals variances due to cost control versus those due to differences in activity levels. The document discusses choosing an appropriate activity base and calculating variable overhead variances using both actual and standard hours.
This document discusses standard costing and variance analysis. It contains:
1) An explanation of how standards are used in budgeting and the standard-setting process.
2) Descriptions of direct material, direct labor, and factory overhead variances and how they are calculated.
3) Examples showing the calculation of price, quantity, rate, efficiency, flexible budget, and volume variances.
The overall purpose is to explain how to analyze variances between actual and standard costs.
Acc mgt noreen09 flexible budgets and overhead analysisJudianto Nugroho
This document discusses flexible budgets and their advantages over static budgets. It provides an example of how to prepare a flexible budget for variable and fixed overhead costs using different activity levels. The flexible budget allows for "apples to apples" cost comparisons by showing costs that should have been incurred at the actual activity level. This improves performance evaluation by revealing variances related to cost control and separating variances due to activity from those due to cost control.
This document discusses flexible budgets and variances. It begins by distinguishing between static and flexible budgets, with static budgets based on a planned output level and flexible budgets based on actual output levels. It then provides an example to illustrate a static budget, flexible budget, and the variances between them. Specifically, it shows how to calculate flexible budget variances and sales volume variances to identify reasons for variances from the static budget. Finally, it discusses the use of standards in variance analysis and how to calculate price and efficiency variances for direct costs.
The document discusses static budgets and performance reports for CheeseCo. A static budget was prepared for CheeseCo based on a planned level of activity of 10,000 machine hours. However, actual activity was lower at 8,000 hours. While total overhead costs were below budget, it is difficult to determine if this was due to good cost control or lower activity levels without adjusting the static budget to reflect actual activity levels. To answer the relevant question of how much of the favorable cost variance was due to lower activity versus good cost control, the static budget must be flexed to the actual level of activity.
Cost Vs Budget PowerPoint Presentation SlidesSlideTeam
This deck consists of total of twenty slides. It has PPT slides highlighting important topics of Cost Vs Budget PowerPoint Presentation Slides. This deck comprises of amazing visuals with thoroughly researched content. Each template is well crafted and designed by our PowerPoint experts. Our designers have included all the necessary PowerPoint layouts in this deck. From icons to graphs, this PPT deck has it all. The best part is that these templates are easily customizable. Just click the DOWNLOAD button shown below. Edit the colour, text, font size, add or delete the content as per the requirement. Download this deck now and engage your audience with this ready made presentation. http://bit.ly/2vMBtbd
This document discusses flexible budgets and variances. It begins by distinguishing between static and flexible budgets. It then provides an example to illustrate a static budget, variances from that static budget, and how to develop a flexible budget. It discusses calculating variances from the flexible budget, including flexible budget variances and sales volume variances. Finally, it discusses using standards in variance analysis and calculating price and efficiency variances for direct costs.
This document discusses traditional unit-based costing and activity-based costing approaches. Under traditional costing, overhead is allocated to products using a single predetermined rate based on direct labor hours. This can result in inaccurate and misleading product costs. Activity-based costing assigns overhead costs to cost pools or activity centers first, then assigns these costs to products based on cost drivers. The document provides a numerical example comparing overhead allocation and unit costs for two products under the traditional and activity-based costing methods.
The document presents a slideshow on marginal costing and absorption costing. It defines marginal cost as the change in total cost from producing one additional unit. Marginal costing focuses on variable costs, treating fixed costs as period costs. Absorption costing treats all costs as product costs. The presentation calculates profit under both methods using an example and highlights the key differences between the two approaches. It concludes that while absorption costing is a total cost technique, marginal costing is useful for management decision making, cost control and profit planning.
This document discusses absorption costing and variable costing. Absorption costing includes both variable and fixed production costs in inventory and cost of goods sold, while variable costing includes only variable costs. Variable costing is more consistent with contribution margin analysis and decision making. Absorption costing is required for external financial reporting and tax purposes, but variable costing provides more useful information to management for decision making.
This document discusses flexible budgets and overhead analysis. It begins by explaining the advantages of flexible budgets over static budgets, noting that flexible budgets allow for "apples to apples" cost comparisons by showing costs that should have been incurred at the actual activity level. The document then provides an example of preparing a flexible budget for CheeseCo, calculating variable and fixed overhead costs across different activity levels. It concludes by discussing how to prepare a performance report using a flexible budget to analyze variances between budgeted and actual costs.
1. COST ACCOUNTING 9TH EDITION
Chapter 12 Page 67
CHAPTER 12
Exercise 1
W.I.P
Ending WIP 11,200 Applied Rate=FOH/DL
Less: Material (4,560) Applied Rate=15840/20160
Conversion Cost 6,640 Applied Rate= 0.7857
Less: DL (3,718.43) CC=DL+FOH
FOH 2,921.57 178.57%=100%+78.57%
$6,640
Exercise 2
1 Work Force= 150 People Hours per day= 8 Hours
Days per week= 5 days Total Weeks= 47 weeks
Normal Capacity Direct Labur Hours= 150*8*5*47 = 282000 Hours
2 Work Force= 150 People Hours per day= 10 Hours
Days per week= 4 days Total Weeks= 47 weeks
Normal Capacity Direct Labur Hours= 150*10*4*47 = 282000 Hours
Exercise 3
Expected FOH= $ 276000
Output= Units 47500
Material Cost= $ 400000
Direct Labour Hours= Hours 28750
Direct Labour cost= $ 276000
Machine Hours= Hours 23000
FOH Based On
Output= 276000/47500 5.81 Per unit
Material Cost= 276000/400000 0.69 Per $
Direct Labour Hours= 276000/28750 9.6 Per Hour
Direct Labour cost= 276000/276000 1 Per $
Machine Hours= 276000/23000 12 Per Hour
Material $ 23,800 Finish Goods $ 48,600
Labor 20,160 Ending Balance 11,200
FOH 15,840
59,800 59,800
Exercise 4
Normal Capacity= 50000 Direct Labour Hours
Actual Capacity= 43000 Hours
expected actual capacity= 40000 Hours
Fixed Cost= $200000
Fixed Rate= $200000/50000 $ 4
1 Variable Rate= $ 6.69
a Foh rate $ 10.69
or
Variable Cost= $6.69*50000 $ 334500
Total Cost $200000+$334500 $ 534500
FOH Rate= $534500/50000 $ 10.69
b Fixed FOH Rate $ 4 per hour
c Capacity Variance
Foh Budgeted for actual
Fixed Cost $ 200000
Variable Cost 6.69*43000 $ 287670 $ 487670
Applied FOH 43000*$ 10.69 $ 459670
Capacity Variance Unfavourable= $ 28000
or
Capacity Variance Unfavourable= (50000-43000)*$4 $28000
61
66
2. COST ACCOUNTING 9TH EDITION
Chapter 12 Page 68
2 a Fixed Cost= $ 200000
Fixed Rate= $ 200000/40000 $ 5
Variable Rate= $ 6.69
FOH Rate $ 11.69
or
Variable Cost= $6.69*40000 $ 267600
Total Cost $200000+$267600 $ 467600
FOH Rate= $467600/40000 $ 11.69
b Fixed FOH Rate $ 5 per hour
Exercise 5
Budgeted FOH= $ 255,000
Budgeted Volume= 100,000 Hours
Actual FOH= $ 270,000
Actual Volume= 105,000 Hours
Applied FOH Rate= $255000/100000 $ 2.55 Per Hour
Applied FOH= 2.55*105000 $ 267750
Actual FOH= 270000
FOH Under Applied= $ 2250
Exercise 6
Production Volume= 30000 Mixers
Estimated FOH=
Indrect Material= $ 220000
Indirect Labour= 240000
Light& Power= 30000
Depreciation= 25000
Miscellaneous= 55000
$ 570000
FOH applied Rate= 570000/30000 $ 19 per Unit
1 Work in process 29000*19 551000
FOH Applied 551000
FOH Applied 551000
FOH Control 551000
2 Actual FOH= 559,600.00
Applied FOH= 551,000.00
FOH Under applied=8,600.00
Exercise 7
Normal Capacity=60000 Units per Year or 5000 Units per Months
Applied Rate= 3.00
Spending Variance
Actual FOH $ 15,500
Less: Budgeted FOH @ actual Cap
Fixed FOH 2,500
Variable Rate * Act cap
4800*2.50 12,000 $ 14,500
Unfavourable $ 1,000
Idle Capacity Variance
Budgeted FOH @ act cap $ 14,500
Less: Applied FOH @ act cap
4800*3 $ 14,400
Unfavourable $ 100
Exercise 8
Normal Capacity=36000 DLH per year or 3000labor hrs per month
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3. COST ACCOUNTING 9TH EDITION
Chapter 12 Page 69
Fix FoH= Total/12= $ 1410
Applied Rate= 2.57
Spending Variance
Actual FOH $ 7,959
Less: Budgeted FOH @ actual Cap
Fixed FOH 1,410
Variable Rate * Act cap
2700*2.10 5,670.00 7,080
Unfavourable 879
Idle Capacity Variance
Budgeted FOH @ act cap $7,080
Less: Applied FOH @ act cap
2700*2.57 6,939
Unfavourable 141
Exercise 9
Normal Capacity=200,000
Applied Rate= $ 3.00
Variable Rate= $ 1
Fixed FOH= $ 600000*2/3 $ 400,000
Spending Variance
Actual FOH $ 631,000
Less: Budgeted FOH @ actual Cap
Fixed FOH $ 400,000
Variable Rate * Act cap
210000*1 $ 210,000 $ 610,000
Unfavourable $ 21,000
Idle Capacity Variance
Budgeted FOH @ act cap $ 610,000
Less: Applied FOH @ act cap
210000*3 $ 630,000
favourable $ (20,000)
Exercise 10
1 Fixed Rate 300000/150000 2 per hour
2 Variable Rate 150000/150000 1 per hour
FOH Rate 3 per hour
FOH Applied= =$ 3*140000 $ 420000
FOH Budgeted For actual
Fixed Cost= $ 300000
Varable Cost= 140000*1 $ 140000
$ 440000
Overall Variance
Actual FOH $ 435,000
Less: Applied FOH@ actual Cap
Applied rate * Act cap
3*140000 420,000.00 $ 420,000
Unfavourable $ 15,000
Spending Variance
Actual FOH 435,000
Less: Budgeted FOH @ actual Cap
Fixed FOH 300,000
Variable Rate * Act cap
140000*1 140,000.00 440,000
favourable (5,000)
Idle Capacity Variance
Budgeted FOH @ act cap 440,000
Less: Applied FOH @ act cap
140000*3 420,000
Unfavourable 20,000
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4. COST ACCOUNTING 9TH EDITION
Chapter 12 Page 70
Exercise 11
Spending Variance
Actual FOH (2) 15,847
Less: Budgeted FOH @ actual Cap 14,968
Unfavourable 879
Idle Capacity Variance
Budgeted FOH @ act cap (1) 14,968
Less: Applied FOH @ act cap 16,234
favourable 1,266
Overall Variance
Actual FOH 15,847
Less: Applied FOH@ actual Cap 16,234
favourable (387)
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5. COST ACCOUNTING 9TH EDITION
Chapter 12 Page 71
Problems
Problem 12.6
June: capacity variance= $800 Favourable
Spending Variance= 0
Actual FOH= $9,000
Capacity Level or actual cap= 700 Tons
July: capacity variance= $0
Spending Variance= $500 Unfav
Actual FOH= $7,500
Capacity Level or actual cap= 500 Tons
August: Capacity Level or actual cap= 400 Tons
Actual FOH= $5,900
Budgeted FOH= $6,000
JUNE( capacity level of 700 Tons)
Spending Variance $
Actual FOH 9,000.
Less: Budgeted FOH 9,000
0.00
Idle Capacity Variance
Budgeted FOH 9,000
Less: Applied FOH 9,800
favourable $800
JULY ( capacity level of 500 Tons)
Spending Variance $
Actual FOH 7,500
Less: Budgeted FOH 7,000
Unfavourable 500
Idle Capacity Variance
Budgeted FOH 7,000
Less: Applied FOH 7,000
$0
AUGUST ( capacity level of 400 Tons)
Spending Variance $
Actual FOH 5,900
Less: Budgeted FOH 6,000
favourable 500
Idle Capacity Variance
Budgeted FOH 6,000
Less: Applied FOH
(400*$14) 5,600
Unfavourable $400
Note: when idle capacity vaiance is zero it means actual and normal capacities are the same, Thus
Budgeted and applied FOH will be equal implies that applied rate is equal to actual rate
Working
Calculation of applied rate
Since july idle cap variance is zero, implies that june normal cap and actual cap are equal.
applied rate = budgeted FOH/Normal capacity
= 7,000.00 / 500
= $ 14
Problem 12.7
June: capacity variance= $0 Unfav
Spending Variance= $600
Actual FOH= $7,000
Capacity Level or actual cap= 800 Tons
July: capacity variance= $800
Spending Variance= $0 Unfav
Actual FOH= $5,600
Capacity Level or actual cap= 600 Tons
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6. COST ACCOUNTING 9TH EDITION
Chapter 12 Page 72
August: Capacity Level or actual cap= 900 Tons
Actual FOH= $7,100
JUNE( capacity level of 800 Tons)
Spending Variance $
Actual FOH 7,000
Less: Budgeted FOH 6,400
Unfav 600
Idle Capacity Variance
Budgeted FOH 6,400
Less: Applied FOH
6,400
0
JULY ( capacity level of 600 Tons)
Spending Variance $
Actual FOH 5,600
Less: Budgeted FOH 5,600
Unfavourable 0
Idle Capacity Variance
Budgeted FOH 5,600
Less: Applied FOH
4,800
Unfav 800
AUGUST ( capacity level of 900 Tons)
Spending Variance $
Actual FOH 7,100
Less: Budgeted FOH (3200+(900*4) 6,800
Unfav 300
Idle Capacity Variance
Budgeted FOH 6,800
Less: Applied FOH
(900*$8) 7,200
favourable (400)
Note: when idle capacity vaiance is zero it means actual and normal capacities are the same, Thus
Budgeted and applied FOH will be equal implies that applied rate is equal to actual rate .however, we need
budgeted FOH and actual are given:
Working
Calculation of Budgeted FOH
Capacity Expanse
June 800 $ 6,400 V.FOH Rate=$800/200 =$4
July 600 $ 5,600 (800) (600)
200 $ 800 FOH $6400 $ 5600
V.OH $3200 $ 2400
Fix FOH $3200 $ 3200
Budgeted FOH for Aug = Fix FOH + (Actual Capacity*Variable Rate) = $3200+(900*$4) = $6800
Applied Rate = $ 6400/800 = $ 8
As the idle cap variance for June is zero thus applied rate is computed on that basis.
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