Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
*PROBLEM 25-7A
Overhead controllable variance:
Actual
Overhead
$80,700
–
–
Overhead
Budgeted
$78,800
[(7,680* X $7.50) + $20,000]
=
$3,100 U
*(4,800 X 1.6 hours)
*PROBLEM 25-8A
Overhead controllable variance:
Actual
Overhead
$189,500
–
–
Overhead
Budgeted
$190,250
[(45,000* X $3.00) +
(42,500 X $1.30)]
=
$750 F
*PROBLEM 25-9A
Overhead controllable variance:
Actual
Overhead
$86,000
–
–
Overhead
Budgeted
$84,100
=
$1,900 U
*PROBLEM 25-10A
Overhead controllable variance:
Actual
Overhead
$22,400
($7,400 + $15,000)
–
–
Overhead
Budgeted
$22,850
[(1,475 X $6) + $14,000]
=
$450 F
CD25 CURRENT DESIGNS
(a) Quantity variance for polyethylene powder Unfavorable
Price variance for polyethylene powder Unfavorable
Quantity variance for finishing kits NEI = Not enough information
Price variance for finishing kits Favorable
(b) Quantity variance for polyethylene powder
( AQ X SP )
(1,200 X $1.50)
$1,800
–
–
( SQ X SP )
(1,080* X $1.50)
$1,620
=
$180 U
*54 X 20
CD25 (Continued)
Quantity variance for type I workers
( AH X SR )
(38 X $15)
$570
–
–
( SH X SR )
(40* X $15)
$600
=
$30 F
*20 X 2
Price variance for type I workers
( AH X AR )
(38 X $15*)
$570
–
–
( AH X SR )
(38 X $15)
$570
=
$ 0
*$570 ÷ 38
BYP 25-1 DECISION-MAKING ACROSS THE ORGANIZATION
(a) When setting a standard for computer/labor hours usage, Tryon Profes-
sionals should consider the following factors:
1. A standard set conservatively high may discourage clients from
purchasing the model.
(b) Logical alternatives for the standard include:
1. 34 hours: The average number of hours used for one application
by all five financial institutions.
2. 45 hours: The conservatively high number experienced by one
financial institution.
BYP 25-1 (Continued)
*BYP 25-2 MANAGERIAL ANALYSIS
(a) The overhead application rate is $144,000 divided by 5,000 hours, or
$28.80 per direct labor hour.
(c)
Actual Overhead
$150,000
–
Overhead Applied
$129,600
=
=
Total Overhead Variance
$20,400 U
(d) Both variances appear significant. The controllable variance is 9.3% of
budgeted overhead ($12,820 ÷ $137,180), and the volume variance is
5.8% of applied overhead ($7,580 ÷ $129,600).
BYP 25-3 REAL-WORLD FOCUS
(a) Glassmaster is using standard costs because management states that
a factor that contributed to improved margins (profit) was a favorable
materials price variance.
BYP 25-4 REAL-WORLD FOCUS
(a) The objectives for each perspective are:
Financial: Increase profitability, lower costs, increase revenue
Customer: Flight is on-time, lowest prices, more customers
Internal: Improve turnaround time.
BYP 25-5 REAL-WORLD FOCUS
(a) The normal industry standard for plants to be considered operating at
100% capacity is two shifts working about 250 days a year.
(b) A government task force urged the company to try to operate at 120%
capacity by traditional standards.
BYP 25-6 COMMUNICATION ACTIVITY
To: Professor Standard
From: I. M. Smart
Subject: Setting Standard Costs
This memorandum covers two points as follows:
(a) The comparative advantages and disadvantages of ideal versus normal
standards.
BYP 25-6 (Continued)
The direct materials quantity standard is the quantity of direct
materials that should be used per unit of finished goods. This
standard is a physical measure and it should include allowances
for unavoidable waste and normal spoilage.
BYP 25-7 ETHICS CASE
(a) Bill and his fellow painters in the painting department will benefit from
Bill’s slow action. The company and its customers are harmed. The
company will incur higher costs on the product and therefore will have
to set a higher selling price or suffer a smaller gross profit. Customers
will have to pay a greater price for the product or stockholders will
obtain less benefit from their investment.
BYP 25-8 ALL ABOUT YOU
(a) The panel made recommendations regarding a number of areas of
concern in higher education. For example, it suggested that new
approaches should be used to control costs, and it stated that the cost
of tuition should grow no faster than median family income. It made
recommendations to strengthen the Pell Grant program, which is the
core of the federal financial aid program. It also recommended that
public universities should use standardized tests to measure student
learning.
BYP 25-9 CONSIDERING YOUR COSTS AND BENEFITS
Discussion Guide: The practice of medicine holds an unusual place in
society. On the one hand, it provides a critical, life-sustaining service. We
expect and demand the highest-quality service. We measure its success in
terms of health improvement and lives saved. On the other hand, it is a
business, and like other businesses, it must operate profitably. Some
healthcare providers characterize this delicate balance as “The Business of
Caring.” How should we balance providing quality health-care and
