Question #1
The following data are the actual results for Marvelous Marshmallow Company for August. 



Actual output 

9,000 
cases 
Actual variable overhead 
$ 
420,000 

Actual fixed overhead 
$ 
120,000 

Actual machine time 

41,000 
machine hours 

Standard cost and budget information for Marvelous Marshmallow Company follows: 



Standard variableoverhead rate 
$ 
9.00 
per machine hour 
Standard quantity of machine hours 

4 
hours per case of marshmallows 
Budgeted fixed overhead 
$ 
112,000 
per month 
Budgeted output 

14,000 
cases per month 

Required: 
1. 
Use any of the methods explained in the chapter to compute the following variances. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance).) 





Question #2
You brought your work home one evening, and your nephew spilled his chocolate milk shake on the variance report you were preparing. Fortunately, knowing that overhead was applied based on machine hours, you were able to reconstruct the obliterated information from the remaining data. Fill in the missing numbers below. (Hint: It is helpful to solve for the unknowns in the order indicated by the letters in the following table.) (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance). Round all overhead rates and "Actual machine hours" to 2 decimal places. Round all other calculations to the nearest whole number or dollar.) 



Question #3
The controller for Rainbow Children’s Hospital, located in Munich, Germany, estimates that the hospital uses 37 kilowatthours of electricity per patientday, and that the electric rate will be €.25 per kilowatthour. The hospital also pays a fixed monthly charge of €3,200 to the electric utility to rent emergency backup electric generators.* 
*The European monetary unit €, the euro, is used by most European countries. 
Required: 
Construct a flexible budget for the hospital’s electricity costs using each of the following techniques. 
1. 
Formula flexible budget. (Round per unit rate to 2 decimal places.) 



2. 
Columnar flexible budget for 42,000, 52,000, and 62,000 patientdays of activity.

Question #4
Lackawanna Licorice Company uses a standard cost accounting system and applies production overhead to products on the basis of machine hours. The following information is available for the year just ended: 
Actual variable overhead: $270,600 
Actual total overhead: $729,300 
Actual machine hours worked: 33,000 
Standard variableoverhead rate per hour: $8.50 
Standard fixedoverhead rate per hour: $13.80 
Planned activity during the period: 32,000 machine hours 
Actual production: 18,700 finished units 
Machinehour standard: Two completed units per machine hour 
Required: 
1. 
Calculate the budgeted fixed overhead for the year. 



2. 
Compute the variableoverhead spending variance. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance). Do not round intermediate calculation.) 





3. 
Calculate the company's fixedoverhead volume variance. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance).) 






4a. 
Did the company spend more or less than anticipated for fixed overhead? 



4b. 
What was the difference in actual and anticipated overhead? 






5. 
Was variable overhead underapplied or overapplied during the year? By how much? (Do not round intermediate calculations.) 






Question #5
Valley View Hospital has an outpatient clinic. Jeffrey Harper, the hospital’s chief administrator, is very concerned about cost control and has asked that performance reports be prepared that compare budgeted and actual amounts for medical assistants, clinic supplies, and lab tests. Past financial studies have shown that the cost of clinic supplies used is driven by the number of medical assistant labor hours worked, whereas lab tests are highly correlated with the number of patients served. 
The following information is available for June: 
• 
Lab tests: Actual lab tests for June cost $329,406 and averaged 3.3 per patient. Each patient is anticipated to have three lab tests, at an average budgeted cost of $66 per test. 
• 
Medical assistants: Valley View’s standard wage rate is $17 per hour, and each assistant is expected to spend 30 minutes with a patient. Assistants totaled 860 hours in helping the 1,610 patients seen, at an average pay rate of $17.50 per hour. 
• 
Clinic supplies: The cost of clinic supplies used is budgeted at $13 per labor hour, and the actual cost of supplies used was $10,050. 
Required: 
1. 
Prepare a report that shows budgeted and actual costs for the 1,610 patients served during June. Compute the differences (variances) between these amounts and label them as favorable or unfavorable. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance). Do not round intermediate calculations.) 






2. 
On the basis of your answer to requirement (1), does it appear that Valley View Hospital has any significant problems with respect to clinic supplies and lab tests? 




3a. 
Determine the spending and efficiency variances for lab tests. (Hint: In applying the overhead variance formulas, think of the number of tests as the activity level, and think of the cost per test as analogous to the variable overhead rate.) (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance). Do not round intermediate calculations.) 






3b. 
Does it appear that Valley View Hospital has any significant problems with the cost of its lab tests? 






4. 
Compare the lab test variance computed in requirement (1), a flexiblebudget variance, with the sum of the variances in requirement (3a). What is the relationship between the flexible budget variance and the total of the individual standardcost variances? 






Subject  Mathematics 
Due By (Pacific Time)  03/26/2014 05:00 pm 
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