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Title: Problem 23-1B
QA_Ori:
Part 1 Direct Materials Variances
Direct materials cost variances
Actual units at actual cost [1,000,000 lbs. @ $4.25] $4,250,000
Direct Materials Price and Quantity Variances
Actual Cost
AQ x AP AQ x SP
Standard Cost
SQ x SP
(Price variance)
(Quantity variance)
(Total materials variance)
Part 2 Direct Labor Variances
Direct labor cost variances
Actual units at actual cost [250,000 hrs. @ $7.75] $1,937,500
Direct Labor Rate and Efficiency Variances
Actual Cost
AH x AR AH x SR
Standard Cost
SH x SR
(Rate variance)
(Efficiency variance)
(Total labor variance)
Part 3 Overhead Variances
Overhead controllable variance
Actual overhead incurred [$1,960,000 + $1,200,000] $ 3,160,000
Fixed overhead volume variance
Budgeted fixed overhead cost [at 80% capacity] $ 2,016,000
Title: Problem 23-2BA
QA_Ori:
(a) Variable Overhead Spending and Efficiency Variances
Actual Overhead
AH x AVR AH x SVR
Applied Overhead
SH x SVR
(Spending variance)
(Efficiency variance)
(Total variable overhead variance)
(b) Fixed Overhead Spending and Volume Variances
Actual Overhead Budgeted Overhead Applied Overhead
(Total fixed overhead variance)
(c) Controllable variance
Variable overhead spending variance $ 50,000 F
Title: Problem 23-3B
QA_Ori:
Part 1
Variable or Fixed Classification
Per Unit
Amount
Variable sales (total divided by 20,000 units)
Sales $ 150.00
Variable costs (total divided by 20,000 units)
Fixed costs
Depreciation—Machinery $ 250,000
Utilities (75% fixed) 150,000
Part 2
TOHONO COMPANY
Flexible Budgets
For Year Ended December 31, 2013
Flexible Budget Flexible Flexible
Variable
Amount
per Unit
Total
Fixed
Cost
Budget for
Unit Sales
of 18,000
Budget for
Unit Sales
of 24,000
Sales $150.00 $2,700,000 $3,600,000
Variable costs
Direct materials 60.00 1,080,000 1,440,000
Shipping 5.80 104,400 139,200
Total variable 88.15 1,586,700 2,115,600
Part 3
Operating income increase for a 20,000 to 28,000 unit sales increase
Potential sales (units) 28,000 Units
Contribution margin per unit x $61.85
*Alternate solution format
0
Part 4
Operating income (loss) at 14,000 units
Potential sales (units) 14,000
Contribution margin per unit x $61.85
Title: Problem 23-4B
QA_Ori:
Part 1
TOHONO COMPANY
Flexible Budget Performance Report
For Year Ended December 31, 2013
Flexible Actual
Budget Results Variances*
Sales (24,000 units) $3,600,000 $3,648,000 $48,000 F
Variable costs
Direct materials 1,440,000 1,400,000 40,000 F
Direct labor 312,000 360,000 48,000 U
*F = Favorable variance; and U = Unfavorable variance
Part 2
(a) Analysis of sales variance
Total Per unit
Interpretation: The sales variance is favorable because the actual price was
higher than planned.
(b) Analysis of direct materials variance
Total Per unit
Interpretation: The direct materials variance is favorable for two possible
reasons. (1) The quantity of materials used might have been less than the
quantity budgeted, and/or (2) the amount paid for the materials might have been
less than the budgeted purchase price.
* (rounded)
Title: Problem 23-5B
QA_Ori:
Part 1
Variable or Fixed Classification
Per Unit
Amount
Variable costs (total divided by 15,000 units)
Indirect materials ………………………………… $ 1.50
Fixed costs (per month)
Depreciation—Building………………………… $ 24,000
Part 2
SUNCOAST COMPANY
Flexible Overhead Budgets
For Month Ended December 31
Flexible Budget Flexible Flexible Flexible
Variab
le
Amou
nt per
Unit
Total
Fixed
Cost
Budget
for Unit
Sales
of 13,000
Budget
for Unit
Sales
of 15,000
Budget
for Unit
Sales of
17,000
Variable overhead costs
Indirect materials $
1.50
$ 19,500 $ 22,500 $ 25,500
0
Fixed overhead costs
Depreciation—Building $
24,000
24,000 24,000 24,000
