Project #25489 - Acct 631 Chapter 11 Homework Assignment

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 variable-overhead 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).)

 

 

     

 

 

 
 

a.

Variable-overhead spending variance

   

b.

Variable-overhead efficiency variance

   

c.

Fixed-overhead budget variance

   

d.

Fixed-overhead volume 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.)

    

 

 

 
       

Budgeted fixed overhead

$27,000

   

Actual fixed overhead

 

a

 

Budgeted production in units

$12,600

   

Actual production in units

 

c

 

Standard machine hours per unit of output

6

 

hours

Standard variable-overhead rate per machine hour

$10

   

Actual variable-overhead rate per machine hour

 

b

 

Actual machine hours per unit of output

 

d

 

Variable-overhead spending variance

$37,000

 

Unfavorable

Variable-overhead efficiency variance

$98,000

 

Favorable

Fixed-overhead budget variance

$8,500

 

Unfavorable

Fixed-overhead volume variance

 

g

 

Total actual overhead

$360,500

   

Total budgeted overhead (flexible budget)

 

e

 

Total budgeted overhead (static budget)

 

f

 

Total applied overhead

$412,000

   

 

 

 

 

 

 

 

 

 

 

Question #3

The controller for Rainbow Children’s Hospital, located in Munich, Germany, estimates that the hospital uses 37 kilowatt-hours of electricity per patient-day, and that the electric rate will be €.25 per kilowatt-hour. 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.)

 

 

 

 

Total budgeted monthly overhead cost

=

Budgeted variable overhead cost per activity unit

x

Total activity units

+

Bugeted fixed overhead cost per month

     

x

patient days

+

 

 

2.

Columnar flexible budget for 42,000, 52,000, and 62,000 patient-days of activity.

 

 

 

 

Patient Days

 

42,000

52,000

62,000

Variable electricity cost

     

Fixed electricity cost

     

Total electricity cost

     

 

 

 

 

 

 

 

 

 

 

 

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 variable-overhead rate per hour: $8.50

Standard fixed-overhead rate per hour: $13.80

Planned activity during the period: 32,000 machine hours

Actual production: 18,700 finished units

Machine-hour standard: Two completed units per machine hour

  

Required:

 

1.

Calculate the budgeted fixed overhead for the year.

 

 

 

 

Budgeted fixed overhead

 

 

2.

Compute the variable-overhead 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.)

 

 

      

 

 

 

Variable-overhead spending variance

   

 

3.

Calculate the company's fixed-overhead 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).)

 

 

 

Fixed-overhead volume variance

   

 

       

 

4-a.

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

 

 

 

 

 

4-b.

What was the difference in actual and anticipated overhead?

 

 

 

Fixed-overhead budget variance

 

 

       

 

5.

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

 

 

 

Variable overhead is

 

by

 

 

       

 

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.)

 

 

 
 

Budget:

Actual:

 
 

1,610 Patients

1,610 Patients

Variance

Medical assistants

       

Clinic supplies

       

Lab tests

       

Total

       

 

       

 

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?

 

Yes

No

3-a.

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.)

 

 

 
 

Variable-overhead spending variance

   

Variable-overhead efficiency variance

   

 

       

 

 

3-b.

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

 

 

 

No

Yes

  

4.

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

 

 

 

The flexible-budget variance equals the total of the individual standard-cost variances.

The flexible-budget variance is greater than the sum of the total of the individual standard-cost variances.

The flexible-budget variance is less than the total of the individual standard-cost variances.

 

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