Chapter 21: Quick Study

QS 21-1: Flexible Budget Performance Report Data Given: • • • • • Actual production and sales: 105,000 units Budgeted sales: $1,300,000 Budgeted variable costs: $750,000 Budgeted fixed costs: $300,000 Actual results will need to be compared to flexible budget amounts. Solution Steps: 1. Prepare a flexible budget based on the actual sales level (105,000 units). 2. Compare the actual results to the flexible budget. 3. Calculate and label each variance as favorable (F) or unfavorable (U). QS 21-2: Flexible Budget Cost Calculations Data Given: • • • • Predicted production: 24,000 units Budgeted fixed costs: $300,000 Budgeted variable costs: $246,000 Actual production: 20,000 units Solution Steps: 1. Fixed costs remain at $300,000 since they do not change with production level. 2. Calculate variable costs for 20,000 units using the per-unit variable cost: Variable Cost per Unit=246,000=10.25 Variable Cost at 20,000 units=20,000×10.25=205,000 QS 21-3: Flexible Budget Income Calculation Data Given: • • • • Budgeted sales for 20,000 units: $400,000 Budgeted variable costs: $80,000 Fixed costs: $150,000 Actual production and sales: 26,000 units Solution Steps: 1. Calculate flexible budgeted sales and variable costs for 26,000 units. Sales at 26,000 units=400,00020,000×26,000=520,000 2. Variable Costs at 26,000 units=80,00020,000×26,000=104,000 3. Calculate flexible budget income: Income=Sales−Variable Costs−Fixed Costs QS 21-4: Flexible Budget Performance Report Data Given: • • Fixed budget for 20,000 units: Sales = $400,000, Variable costs = $80,000, Fixed costs = $150,000 Actuals: 26,000 units sold at $480,000; Variable costs = $112,000; Fixed costs = $145,000 Solution Steps: 1. Prepare a flexible budget for 26,000 units. 2. Compare actual results to the flexible budget and compute variances, labeling each as F or U. QS 21-5: Standard Cost Card for BatCo Data Given: • • • Wood: 2 pounds at $18 per pound Direct labor: 0.25 hours at $20 per hour Overhead: $40 per direct labor hour Solution Steps: 1. Calculate the standard cost per unit for each element: o Direct Material Cost: 2×18=362 o Direct Labor Cost: 0.25×20=50.25 o Overhead Cost: 0.25×40=100.25 2. Add these amounts to create the standard cost card. QS 21-6: Total Cost Variance Data Given: • • Standard cost from QS 21-5 Actual cost to manufacture 100 bats: $5,400 Solution Steps: 1. Calculate the total standard cost for 100 bats. 2. Compare actual cost ($5,400) with total standard cost to find the variance and label as F or U. QS 21-7: Direct Materials Variance Data Given: • Information on direct materials variances needed. Solution Steps: 1. Compute the total direct materials variance by comparing the actual cost to the standard cost. 2. Identify whether it’s favorable (F) or unfavorable (U). QS 21-8: Direct Materials Price and Quantity Variances Solution Steps: 1. Calculate the Price Variance and Quantity Variance using actual and standard costs and quantities. 2. Label each as F or U. QS 21-9: Direct Materials Price Variance Data Given: • • Unfavorable price variance of $4,000 Actual price per pound: $78; standard price per pound: $77.50 Solution Steps: 1. Use the price variance formula to find the actual quantity of materials used. QS 21-10: Actual Cost of Direct Materials Data Given: • • • Standard cost of direct materials: $150,000 Favorable price variance: $12,000 Favorable quantity variance: $2,000 Solution Steps: 1. Subtract the favorable variances from the standard cost to get the actual cost. QS 21-11 and QS 21-12: Direct Labor Rate and Efficiency Variances Solution Steps: 1. Calculate Rate Variance and Efficiency Variance. 2. Determine if each is favorable (F) or unfavorable (U). QS 21-13 to QS 21-20A: Overhead Variances Solution Steps: 1. Use standard formulas to compute total, controllable, and volume variances and identify each as F or U. QS 21-21 and QS 21-22: Sales Variances Solution Steps: 1. Calculate Sales Price Variance and Sales Volume Variance using budgeted and actual sales data. 2. Identify each variance as F or U. QS 21-23: Materials Rate Change Solution Steps: 1. Calculate flexible budget amount for total shipments. 2. Calculate projected savings from the new rate. QS 21-24: Overhead Rate Change Solution Steps: 1. Calculate standard overhead rate per return before and after improvement. QS 21-25: Standard Costs Terminology Solution Steps: 1. Match terms with definitions provided: o Standard cost card: Record accumulating standard cost information. o Management by exception: Focusing on large variances. o Standard cost: Preset cost under normal conditions. o Ideal standard: Quantity if production is 100% efficient. These answers provide a clear path for tackling each Quick Study question in Chapter 21.