16. Vandel Inc. bases its selling and administrative expense budget on budgeted

Question

16.

Vandel Inc. bases its selling and administrative expense budget on budgeted unit sales. The sales budget shows 3,100 units are planned to be sold in April. The variable selling and administrative expense is $3.60 per unit. The budgeted fixed selling and administrative expense is $35,810 per month, which includes depreciation of $4,600 per month. The remainder of the fixed selling and administrative expense represents current cash flows. The cash disbursements for selling and administrative expense on the April selling and administrative expense budget should be:

46,970

42,370

31,210

11,160

17.

Bevard Nuptial Bakery makes very elaborate wedding cakes to order. The company has an activity-based costing system with three activity cost pools. The activity rate for the Size-Related activity cost pool is $0.84 per guest. (The greater the number of guests, the larger the cake.) The activity rate for the Complexity-Related cost pool is $35.91 per tier. (Cakes with more tiers are more complex.) Finally, the activity rate for the Order-Related activity cost pool is $82.41 per order. (Each wedding involves one order for a cake.) The activity rates include the costs of raw ingredients such as flour, sugar, eggs, and shortening. The activity rates do not include the costs of purchased decorations such as miniature statues and wedding bells, which are accounted for separately.

Data concerning two recent orders appear below:

Euertz
Wedding

Sparacio
Wedding

  Number of reception guests

70            

200            

  Number of tiers on the cake

9            

6            

  Cost of purchased decorations for cake

$16.25            

$73.45            

Assuming that all of the costs listed above are avoidable costs in the event that an order is turned down, what amount would the company have to charge for the Euertz wedding cake to just break even?

$532.24

$16.25

$82.41

$480.65

18.

Gourley Clinic uses client-visits as its measure of activity. During August, the clinic budgeted for 4,200 client-visits, but its actual level of activity was 4,270 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting:

Fixed element per month

Variable element per client-visit

  Revenue

—

$41.00

  Personnel expenses

$37,000

$12.20

  Medical supplies

3,000

9.00

  Occupancy expenses

8,200

3.00

  Administrative expenses

7,000

0.3

  Total expenses

$55,200

$24.50

The activity variance for administrative expenses in August would be closest to:

$81 F

$21 U

$81 U

$21 F

19.

Oddo Corporation makes a product with the following standard costs:

Standard Quantity or Hours

Standard Price or Rate

Standard Cost Per Unit

  Direct materials

4.1 grams

   $2.00 per gram

$8.20          

  Direct labor

0.6 hours

   $16.00 per hour

$9.60          

  Variable overhead

0.6 hours

   $2.00 per hour

$1.20          

The company reported the following results concerning this product in November.

  Originally budgeted output

9,800

  units

  Actual output

9,900

  units

  Raw materials used in production

44,920

  grams

  Purchases of raw materials

47,410

  grams

  Actual direct labor-hours

7,980

  hours

  Actual cost of raw materials purchases

$132,550

  Actual direct labor cost

$125,243

  Actual variable overhead cost

$14,456

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.

The variable overhead rate variance for November is:

$1,504 F

$1,370 U

$1,504 U

$1,370 F

20.

LHU Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 3.5 hours of direct labor at the rate of $14.00 per direct labor-hour.

The company plans to sell 34,000 units of Product WZ in June. The finished goods inventories on June 1 and June 30 are budgeted to be 560 and 140 units, respectively. Budgeted direct labor costs for June would be: (Do not round intermediate calculations.)

$1,664,170

$1,682,920

$468,500

$1,645,420

Vandel Inc. bases its selling and administrative expense budget on budgeted unit sales. The sales budget shows 3,100 units are planned to be sold in April. The variable selling and administrative expense is $3.60 per unit. The budgeted fixed selling and administrative expense is $35,810 per month, which includes depreciation of $4,600 per month. The remainder of the fixed selling and administrative expense represents current cash flows. The cash disbursements for selling and administrative expense on the April selling and administrative expense budget should be:

Explanation / Answer

16)

Cash disbursements for selling and administrative expense on the April = variable selling and administrative expense per unit*budgeted unit sales + budgeted fixed selling and administrative expense - depreciation

Cash disbursements for selling and administrative expense on the April = 3.60*3100 + 35810 - 4600

Cash disbursements for selling and administrative expense on the April = $ 42,370

Answer

42,370

17)

Amount would the company have to charge for the Euertz wedding cake to just break even = Cost of purchased decorations for cake + Size-Related activity cost + Complexity-Related cost + Order-Related activity cost

Amount would the company have to charge for the Euertz wedding cake to just break even = 16.25 + 0.84*70 + 35.91*9 + 82.41*1

Amount would the company have to charge for the Euertz wedding cake to just break even = 480.65

Answer

480.65

18)

The activity variance for administrative expenses = Administrative expenses as per Fixed Budget - Administrative expenses as per Planning Budget

The activity variance for administrative expenses =(7000+0.3*4270)- (7000+0.3*4200)

The activity variance for administrative expenses = 21 Unfavorable

Answer

$21 U

19)

Variable Overhead rate variance = (Actual Rate*Actual Hour -Standard Rate*Actual Hour )

Variable Overhead rate variance = (14456- 2*7980)

Variable Overhead rate variance = $ 1504 favorable

Answer

$1,504 F

20)

Budgeted Production Unit = Budgeted Sale + Ending inventory - beginning inventory

Budgeted Production Unit = 34000+140-560

Budgeted Production Unit = 33580

Budgeted direct labor costs for June = Budgeted Production Unit*Standard hour * Standard rate

Budgeted direct labor costs for June = 33580*3.5 * 14

Budgeted direct labor costs for June = 1,645,420

Answer

1,645,420

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