1) Fletcher Supplies Company has a sales office which sells concrete culvert pip
ID: 2497819 • Letter: 1
Question
1) Fletcher Supplies Company has a sales office which sells concrete culvert pipe to property developers. The sales office is a revenue center and must prepare a monthly performance report. It has provided the following information.
Revenue Center Performance Report
Actual
Flexible Budget
Flexible
Sales Volume
Static
Product type:
Sales Revenue
Variance
U/F
Budget
Variance
U/F
Budget
40 inch
$31,500
$30,000
$40,000
36 inch long
$40,150
$42,000
$33,000
36 inch short
$36,200
$33,000
$30,000
32 inch
$19,000
$20,000
$28,000
How much is the flexible budget variance for the 40 inch pipe?
A) $1,850 U
B) $3,000 F
C) $10,000 U
D) $1,500 F
2) Fletcher Supplies Company has a sales office which sells concrete culvert pipe to property developers. The sales office is a revenue center and must prepare a monthly performance report. Below is the partially completed performance report.
Revenue Center Performance Report
Actual
Flexible Budget
Flexible
Sales Volume
Static
Product type:
Sales Revenue
Variance
U/F
Budget
Variance
U/F
Budget
40 inch
$31,500
$30,000
$40,000
36 inch long
$40,150
$42,000
$33,000
36 inch short
$36,200
$33,000
$30,000
32 inch
$19,000
$20,000
$28,000
The company uses management by exception to address flexible budget variances. On which variance would the company focus first?
A) 40 inch
B) 36 inch long
C) 36 inch short
D) 32 inch
3) Chesapeake Company provided the following manufacturing costs for the month of June.
Direct labor cost
$136,000
Direct materials cost
80,000
Equipment depreciation (straight-line)
24,000
Factory insurance
19,000
Factory manager's salary
12,800
Janitor's salary
5,000
Packaging costs
18,800
Property taxes
16,000
From the above information, calculate Chesapeake’s total variable costs.
A) $311,600
B) $62,300
C) $234,800
D) $38,400
4) Da Silva Company has variable costs of $0.60 per unit of product. In August, the volume of production was 24,000 units and units sold were 20,000. The total production costs incurred were $31,900. What are the fixed costs per month?
A) $17,500
B) $19,900
C) $9,600
D) $14,400
Revenue Center Performance Report
Actual
Flexible Budget
Flexible
Sales Volume
Static
Product type:
Sales Revenue
Variance
U/F
Budget
Variance
U/F
Budget
40 inch
$31,500
$30,000
$40,000
36 inch long
$40,150
$42,000
$33,000
36 inch short
$36,200
$33,000
$30,000
32 inch
$19,000
$20,000
$28,000
Explanation / Answer
1)correct option is "D" - 1500 F
[31500 - 30000 = 1500F ]
2)correct option is "B" - 36 inch
As it has a highest negative unfavorable variance = [40150 -42000 = -1850]
3)correct option is "C" - 234800
[136000 + 80000 + 18800]
4) Total variable cost = .60 *24000 = 14400
Fixed cost = 31900 - 14400 = 17500
correct option is "A"
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