The CEO is convinced of the Director of Sales' ability to achieve a profit of $40,000...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The CEO is convinced of the Director of Sales' ability to achieve a profit of $40,000 a month and reports those costs on the company's static budget. However, actual sales for the first month were 12,900 units. The actual revenues and expenses for the month were: VARIABLE COSTS (per unit) Sales: Direct Materials: Direct Labor: Indirect Materials: Indirect Labor: Utilities for Factory: Supplies for Factory: Variable Administrative Salaries Variable Sales Commissions: FIXED COSTS (per month) Factory Supervisor Salaries: Factory Depreciation: Property Taxes (Factory): Insurance (Factory): Maintenance (Factory): Fixed Sales Salaries Depreciation, Sales Equip. Advertising $237,457 $15,200 $58,050 $1,305 $2,200 $8,900 $1,925 $9,702 $14,760 $43,000 $15,500 $4,500 $3,500 $1,860 $10,000 $12,250 $5,720 Requirement 4 (40 points) 1. Prepare a report showing the revenue and spending and activity variances for each cost, including total and net income amounts. (Remember, you will need to prepare a flexible budget for the actual level of activity in order to complete this report.) 2. Based on your report, answer the following: a. Look at the Revenue Variance in conjunction with the Selling Expense variances. What is a possible explanation for these variances? b. Are the Activity Variances mostly favorable or unfavorable? Is this a good thing? What do activity variances tell us about the company's performance? C. What do you notice about the FIXED activity variances? Why is this the case? d. What do the Direct and Indirect Materials spending variances indicate about the company's use of materials? e. What do the Direct and Indirect Labor spending variances indicate about the company's laborers? f. Overall, how well did the company perform in the first month with regard to sales of the Whack-O? Number of units Revenue Total variable costs Total fixed costs Total costs Net income FLEXIBLE BUDGET 11,700 9,200 $170,200 78,200 92,000 170,200 0 $216,450 99,450 92,000 191,450 25,000 13,200 $244,200 112,200 92,000 204,200 40,000 The CEO is convinced of the Director of Sales' ability to achieve a profit of $40,000 a month and reports those costs on the company's static budget. However, actual sales for the first month were 12,900 units. The actual revenues and expenses for the month were: VARIABLE COSTS (per unit) Sales: Direct Materials: Direct Labor: Indirect Materials: Indirect Labor: Utilities for Factory: Supplies for Factory: Variable Administrative Salaries Variable Sales Commissions: FIXED COSTS (per month) Factory Supervisor Salaries: Factory Depreciation: Property Taxes (Factory): Insurance (Factory): Maintenance (Factory): Fixed Sales Salaries Depreciation, Sales Equip. Advertising $237,457 $15,200 $58,050 $1,305 $2,200 $8,900 $1,925 $9,702 $14,760 $43,000 $15,500 $4,500 $3,500 $1,860 $10,000 $12,250 $5,720 Requirement 4 (40 points) 1. Prepare a report showing the revenue and spending and activity variances for each cost, including total and net income amounts. (Remember, you will need to prepare a flexible budget for the actual level of activity in order to complete this report.) 2. Based on your report, answer the following: a. Look at the Revenue Variance in conjunction with the Selling Expense variances. What is a possible explanation for these variances? b. Are the Activity Variances mostly favorable or unfavorable? Is this a good thing? What do activity variances tell us about the company's performance? C. What do you notice about the FIXED activity variances? Why is this the case? d. What do the Direct and Indirect Materials spending variances indicate about the company's use of materials? e. What do the Direct and Indirect Labor spending variances indicate about the company's laborers? f. Overall, how well did the company perform in the first month with regard to sales of the Whack-O? Number of units Revenue Total variable costs Total fixed costs Total costs Net income FLEXIBLE BUDGET 11,700 9,200 $170,200 78,200 92,000 170,200 0 $216,450 99,450 92,000 191,450 25,000 13,200 $244,200 112,200 92,000 204,200 40,000
Expert Answer:
Answer rating: 100% (QA)
Here is the report with the required variances and calculations Actual for month Units produced 12900 Flexible Budget for 12900 units Revenue 12900 units x 1850 per unit 238650 Direct Materials 12900 ... View the full answer
Related Book For
Managerial Accounting Tools for business decision making
ISBN: 978-1118096895
6th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Posted Date:
Students also viewed these accounting questions
-
The following information was obtained from the accounting records of Macquarie Ltd. Machine A Machine B Acquisition date 1 April 2022 1 May 2022 Cost $38,000 fully paid in cash $28,800, 50% paid by...
-
Revenues Variable cost Fixed Expenses Gross profit Depreciation Net operating income Income tax expense Net income
-
For February, sales revenue is $300,000, sales commissions are 5% of sales, the sales manager's salary is $40,000, advertising expenses are $13,000, shipping expenses total 1% of sales, and...
-
Pantheon Gaming, a computer enhancement company, has three product lines: audio enhancers, video enhancers, and connection-speed accelerators. Common costs are allocated based on relative sales. A...
-
Surfboards USA wants to expand its operations to Australia. The current indirect exchange rate is 1.45 for U.S. and Australian dollars. The anticipated inflation rate is 3% in the United States, but...
-
Were there possibilities of agency problems within Stafford? Why or why not? Could managerial opportunism be an issue?
-
Dividends per Share Calculate the company's dividend paid per share of common stock. What was the dividend payout ratio? Use the following financial data for Brenner Instruments Sales revenue.. Cost...
-
The Aggies will host Tech in this years homecoming football game. Based on advance ticket sales, the athletic department has forecast hot dog sales as shown in the following table. The school buys...
-
The vocal folds are responsible for voiceless consonants like p , t , and k ?
-
The press shown is used to emboss a small seal at E. Knowing that P = 250 N, determine (a) The vertical component of the force exerted on the seal, (b) The reaction at A. 400 mm 15 200 mm 20 G0
-
The following information belongs to Azreen Cosmetics Enterprise. The owner, Azreen is an art and design graduate who does not have accounting knowledge to prepare a full set of financial statement...
-
In this phase you will be designing a table of information (in a file) that will be created later in your database application. Your table must have a minimum of 6 rows of data with 6 attributes...
-
uestion: An intern suggested that the company use activity-based costing to cost its products. A team was formed to investigate thisidea, and it came back with the recommendation that four activity...
-
What is the result of this code? ArrayList flowers new ArrayList (); flowers.add("daisy"); flowers.add("rose"); flowers.add("orchid"); System.out.println(flowers.get(1));...
-
Question 19: On 31 Dec, 2014, Merigo Co sold goods to a customer for $10 million, representing a mark-up on cost of 25%; in order to encourage sales, Merigo Co has given the customer interest free...
-
What is the issue? static String saySomething(String name, int count) { String greeting = ""; for(int i = 0; i < count; i++) { } greeting += "Welcome," + name + " "; return name; }
-
A two stock portfolio has 30 percent in Stock A, with an expected return of 21 percent and a standard deviation of 5 percent, and the remainder in Stock B, with an 18 percent expected return and a...
-
In Exercises delete part of the domain so that the function that remains is one-to-one. Find the inverse function of the remaining function and give the domain of the inverse function. f(x) = 16x4 -3...
-
Rattigan Companys income statement contained the condensed information below. Rattigans balance sheet contained the comparative data at December 31, shown below. Accounts payable pertain to operating...
-
Bracewell Company reported net income of $195,000 for 2014. Bracewell also reported depreciation expense of $40,000 and a gain of $5,000 on disposal of plant assets. The comparative balance sheet...
-
Burte Corporation prepared the following variance report. Instructions Fill in the appropriate amounts or letters for the question marks in thereport. Burte Corporation Variance Report-Purchasing...
-
Objections to monopolies do not include which of the following? a. They reduce output below the efficient level of output that would be produced in perfect competition. b. They reduce the price below...
-
If regulators set a price according to marginal cost pricing, the firm will a. earn positive economic profits. b. make zero economic profits. c. suffer an economic loss. d. earn the same level of...
-
What is the objective of antitrust policy?
Study smarter with the SolutionInn App