Accounting Chapter 17 Tallon Associates Consulting Firm Specializing Business

Document Type
Test Prep
Book Title
Fundamentals of Cost Accounting 5th Edition
Authors
Michael Maher, Shannon Anderson, William Lanen
135.
Barrymore Corporation, which makes landing gears, has provided the following data for a
recent month:
Budgeted production
1,200
gears
Standard machine-hours
per gear
5.9
machine-
hours
Budgeted supplies cost
$6.50
per machine-
hour
Actual production
1,300
gears
Actual machine-hours
7,950
machine-
hours
Actual supplies cost
(total)
$49,742
17-142
precision drills for oil exploration:
Budgeted production
4,000
drills
Standard machine-
hours per drill
8.4
machine-
hours
Standard indirect labor
$9.40
per machine-
hour
Standard power
$2.90
per machine-
hour
Actual production
4,300
drills
Actual machine-hours
36,530
machine-
hours
Actual indirect labor
$362,756
Actual power
$97,693
17-143
137.
Tallon & Associates is a consulting firm specializing in business location studies. The
results for last year, along with the budget, are as follows:
Actual
Budget
Billable hours
25,200
24,000
Revenue
$2,772,000
$2,400,000
Professional salaries (variable)
1,310,000
1,200,000
Other variable costs
488,000
400,000
Fixed costs
492,000
450,000
Office management salaries (fixed)
317,000
225,000
Operating profit
$165,000
$125,000
138.
139.
140.
141.
142.
143.
17-149
144.
145.
The Halcion Company uses a standard cost system in which manufacturing overhead
costs are applied to units of the company's single product on the basis of standard direct
labor-hours (DLHs). The standard cost card for the product follows:
Standard Cost Card-per unit of product
17-150
Direct Materials, 4 yards at $3.50 per yard
$14
Direct Labor, 1.5 DLHs at $8 per DLH
12
Variable Overhead, 1.5 DLHs at $2 per DLH
3
Fixed Overhead, 1.5 DLHs at $6 per DLH
9
Standard cost per unit
$38
The following data pertain to last year's activities:
The company manufactured 18,000 units of
product during the year. A total of 70,200 yards
of material was purchased during the year at a
cost of $3.75 per yard. All of this material was
used to manufacture the 18,000 units.
The company worked 29,250 direct labor-hours
during the year at a cost of $7.80 per hour.
The denominator activity level was 22,500
direct labor-hours.
Budgeted fixed manufacturing overhead costs
were $135,000 while actual manufacturing
overhead costs were $133,200.
Actual variable overhead costs were $61,425.
146.
Advantage Co. sells two types of drivesstandard and specialty. The budget is based on a
combination of last year's information as well as forecasted industry sales and the
company's market share. The following information is provided for June:
Budgeted
Actual
Standard
Specialty
Standard
Specialty
Selling price
per drive
$50
$70
$52
$70
Variable
price per
drive
24
40
24
42
Contribution
margin
$26
$30
$28
$28
Sales
(units)
5,000
1,000
4,500
1,500
Fixed costs
$60,000
$63,000

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