Determining sales and variable cost volume variances Required Use the information provided in Exercise 8-3B. a. Determine
Question:
Determining sales and variable cost volume variances
Required
Use the information provided in Exercise 8-3B.
a. Determine the sales and variable cost volume variances.
b. Classify the variances as favorable or unfavorable.
c. Comment on the usefulness of the variances with respect to performance evaluation and identify the member of the management team most likely to be responsible for these variances.
d. Determine the amounts of fixed cost that will appear in the flexible budget.
e. Determine the fixed cost per unit based on planned activity and the fixed cost per unit based on actual activity. Assuming Clyde uses information in the master budget to price its product, explain how the fixed cost volume variance could affect the company’s profitability.
Step by Step Answer:
Master Budget 18000 Units Flexible Budget 19000 Units a b Volume Variances Sales 360000 380000 20000F Variable manufacturing 216000 228000 12000 U c Since the per unit sales price and per unit variable manufacturing costs are the same for both the master and flexible budgets the activity variances are solely attributable to the fact that sales volume was 1000 units more than planned The favorable 20000 sales volume variance suggests that increased sales are beneficial However Clyde needs more information before drawing this conclusion The increase in sales may have resulted from reducing the actual sales price which could produce negative consequences The unfavorable 12000 variable cost volume variance is misleading The total amount of variable costs is expected to increase when volume increases This variance is expected and not a bad thing Upperlevel marketing managers are normally responsible for the sales and variable cost volume variances d The amount of fixed costs appearing in the flexible budget is 20000 for manufacturing costs and 18000 for fixed selling and administrative costs The fixed costs in both the master and flexible budgets are estimates Fixed costs are estimated to be the same regardless of the volume of production and sales e Master Budget Flexible Budget Fixed manufacturing 20000 20000 ...View the full answer
Fundamental Managerial Accounting Concepts
ISBN: 978-0078110894
6th Edition
Authors: Edmonds, Tsay, olds
Students also viewed these Managerial Accounting questions
-
Determining sales and variable cost volume variances Required Use the information provided in Exercise 15-3. a. Determine the sales and variable cost volume variances. b. Classify the variances as...
-
Determining sales and variable cost volume variances Todhunter Publications established the following standard price and costs for a hardcover picture book that the company produces. Todhunter...
-
Determining sales and variable cost volume variances Vlascenko Food Corporation developed the following standard price and costs for a refrigerated TV dinner that the company produces. Vlascenko...
-
Suppose the United States imposes a tariff on imported sugar. What are the consequences of this on consumers, domestic and foreign producers, and land use?
-
Dan Fineman, the president of King Company, is pleased. King substantially increased its net income in 2017 while keeping its unit inventory relatively the same. Howard Gross, chief accountant,...
-
What are the main issues involved in using EVM effectively? How can a project manager overcome these issues?
-
Table 2-2 on page 45 is a frequency distribution summarizing the IQ scores of a group of children with low lead exposure. Is it possible to identify the original list of the 78 individual IQ scores...
-
The names of the employees of Hogan Thrift Shop are listed on the following payroll register. Employees are paid weekly. The marital status and the number of allowances claimed are shown on the...
-
The dehydration of t-butanol to isobutene is run as an equilibrium-limited reaction with Keg - 2.4 atm at T-323 K. The gas-phase reactor is operated at 1 atm total pressure, and the feed is to...
-
Suppose you drive a 2013 model auto-mobile that averages 25 miles per gallon (mpg) for 15,000 miles annually. If you purchase a new automobile that averages 30 mpg, how much extra money can you...
-
Preparing master and flexible budgets Clyde Manufacturing Company established the following standard price and cost data. Clyde planned to produce and sell 18,000 units. It actually produced and sold...
-
Determining flexible budget variances Use the standard price and cost data provided in Exercise 8-3B. Assume the actual sales price was $19.60 per unit and the actual variable cost was $11.80 per...
-
The vertical cross section of the cooling tower of a nuclear power plant is hyperbolic, as shown in Fig. 21.125. Find the radius r of the smallest circular horizontal cross section. Fig. 21.125. 40...
-
Mira compiles invoices, receipts, vouchers, etc. so that she can accurately calculate the expenses, revenue, and profit of the company. For every transaction, Mira requires written documentation, so...
-
One type of vendor transaction is an expense transaction. This is valued for what we pay for the time/products received. The service can be paid for through cash, credit card, or check. The bill form...
-
Rufaro is the payroll administrator for New Wave Industries. There are four employees on the payroll. Buck and Roger receive annual salaries of $41,000 and $85,555, respectively. Luke receives...
-
Discuss the role of leadership styles in shaping organizational behavior. Explain
-
Exercise 1: Let X, X,...,X be a S.R.S from f(x; 0) = Geomtric (0). Find a sufficient statistic for 0 ?. Exercise 2: Let X, X,... Xn be a S.R.S from f(x; 0) = Bin (k, 0). Find a sufficient statistic...
-
Briefly explain the purpose and activities involved in an external audit conducted as part of the development of a digital marketing strategy.
-
A 2500-lbm car moving at 15 mi/h is accelerated at a constant rate of 15 ft/s 2 up to a speed of 50 mi/h. Calculate force and total time required?
-
Costing is the technique and process of ascertaining cost. It has the important objective of ascertaining the cost of goods and services being produced. Explain.
-
Patrick Inc. makes industrial solvents sold in five- gallon drums. Planned production in units for the first three months of the coming year is: January ...........43,800 February .........41,000...
-
Patrick Inc. makes industrial solvents sold in five- gallon drums. Planned production in units for the first three months of the coming year is: January ...........43,800 February .........41,000...
-
Patrick Inc. makes industrial solvents. Planned production in units for the first three months of the coming year is: January ........... 43,800 February ......... 41,000 March .......... 50,250 Each...
-
Image transcription text Course Modules: Principles of Ac X + X C learn.vccs.edu/courses/569062/modules O C Aug 29 | 10 pts TCC Fall 2023 Home Announcements Chapter 5: Cost-Volume-Profit Analysis...
-
Why is it important to normalize the income statement? Review Later It adjusts the property's expenses for the year to be more realistic if the overall market of comparable properties is performing...
-
When an AC source is connected across a 13.0 2 resistor, the output voltage is given by Av = (170 V)sin(60t). Determine the following quantities. (a) maximum voltage V (b) rms voltage (c) rms current...
Study smarter with the SolutionInn App