Question 1:
Crede Company budgeted selling expenses of $30,511 in January, $35,250 in February, and $39,751 in March. Actual selling expenses were $31,723 in January, $34,569 in February, and $46,573 in March.
Prepare a selling expense report that compares budgeted and actual amounts by month and for the year to date.
Question 2:
Thome Company uses a flexible budget for manufacturing overhead based on direct labor hours. Variable manufacturing overhead costs per direct labor hour are as follows.
Indirect labor $1.40
Indirect materials 0.50
Utilities 0.30
Fixed overhead costs per month are: Supervision $3,811, Depreciation $1,189, and Property Taxes $870. The company believes it will normally operate in a range of 6,600-10,500 direct labor hours per month.
Prepare a monthly manufacturing overhead flexible budget for 2014 for the expected range of activity, using increments of 1,300 direct labor hours
Question 3:
Thome Company uses a flexible budget for manufacturing overhead based on direct labor hours. Variable manufacturing overhead costs per direct labor hour are as follows.
Indirect labor $1.40
Indirect materials 0.80
Utilities 0.40
Fixed overhead costs per month are: Supervision $3,686, Depreciation $1,324, and Property Taxes $696. The company believes it will normally operate in a range of 8,100-12,600 direct labor hours per month.
Assume that in July 2014, Thome Company incurs the following manufacturing overhead costs.
| Variable Costs |
|
Fixed Costs |
| Indirect labor |
|
$15,282 |
|
Supervision |
|
$3,686 |
| Indirect materials |
|
8,683 |
|
Depreciation |
|
1,324 |
| Utilities |
|
3,985 |
|
Property taxes |
|
696 |
(a) Prepare a flexible budget performance report, assuming that the company worked 11,100 direct labor hours during the month. (List variable costs before fixed costs.)
(b) Prepare a flexible budget performance report, assuming that the company worked 10,600 direct labor hours during the month.
Question 4:
The actual selling expenses incurred in March 2014 by DeWitt Company are as follows.
| Variable Expenses |
|
Fixed Expenses |
| Sales commissions |
|
$14,650 |
|
Sales salaries |
|
$35,023 |
| Advertising |
|
10,433 |
|
Depreciation |
|
7,251 |
| Travel |
|
8,650 |
|
Insurance |
|
1,582 |
| Delivery |
|
3,540 |
|
|
|
(a) Prepare a flexible budget performance report for March, assuming that March sales were $173,000. Variable costs and their percentage relationship to sales are: Sales Commissions 8%, Advertising 6%, Traveling 5%, and Delivery 2%. Fixed selling expenses will consist of Sales Salaries $35,023, Depreciation on Delivery Equipment $7,251, and Insurance on Delivery Equipment $1,582. (List variable costs before fixed costs.)
(b) Prepare a flexible budget performance report, assuming that March sales were $181,300.
Question 5:
Cook Company estimates that 339,300 direct labor hours will be worked during the coming year, 2014, in the Packaging Department. On this basis, the budgeted manufacturing overhead cost data are computed for the year.
| Fixed Overhead Costs |
|
Variable Overhead Costs |
| Supervision |
|
$93,600 |
|
Indirect labor |
|
$142,506 |
| Depreciation |
|
74,520 |
|
Indirect materials |
|
81,432 |
| Insurance |
|
35,640 |
|
Repairs |
|
67,860 |
| Rent |
|
24,000 |
|
Utilities |
|
67,860 |
| Property taxes |
|
14,520 |
|
Lubricants |
|
27,144 |
|
|
$242,280 |
|
|
|
$386,802 |
It is estimated that direct labor hours worked each month will range from 28,900 to 37,900 hours.
During October, 28,900 direct labor hours were worked and the following overhead costs were incurred.
Fixed overhead costs: Supervision $7,800, Depreciation $6,210, Insurance $2,937, Rent $2,000, and Property taxes $1,210.
Variable overhead costs: Indirect labor $13,219, Indirect materials, $6,620, Repairs $5,700, Utilities $6,152, and Lubricants $2,596.
(a) Prepare a monthly manufacturing overhead flexible budget for each increment of 3,000 direct labor hours over the relevant range for the year ending December 31, 2014.
(b) Prepare a flexible budget report for October