ACCT 321 Cost Accounting I (Weiss) Fall 2017 Makeup Exam 3 15pts) The actual inf

ID: 2571487 • Letter: A

Question

ACCT 321 Cost Accounting I (Weiss) Fall 2017 Makeup Exam 3 15pts) The actual information pertains to the month of September. As part of the budgeting process, Kriger Fencing Company developed the following static budget for September. Kriger is in the process of preparing the flexible budget and understanding the results. Static Actual Flexible Results Buget Budget Sales volume (in units) 10,000 as12.500 Sales revenues Variable costs S500,000 s 5ojoo S625,000 oS 256,.000 yoov 300.000sou 244,000 $ du 325,000 a Fixed costs Operating profit 229.000 4ow 225000 S 15.000 S Directions: complete the table above for the flexible budget, calculating and completing the correct totals for each blank line item. 20 pts) The following standard costs were developed for one of the products of Larry Corporation (problem continues onto next page)

Explanation / Answer

Actual Results

Flexible Budget

Static Budget

Sales Volume (Units)

10,000

12,500

Sales Revenue

$500,000

$625,000

Variable Costs

$256,000

$240,000

$300,000

Contribution Margin

$244,000

$260,000

$325,000

Fixed Cost

$229,000

$225,000

Operating profit

$15,000

$35,000

$100,000

Sales Revenue under Flexible Budget = Sales Volume under Actual Results x (Sales Revenue under Static Budget / Sales Volume under Static Budget)
=> 10,000 * ($625,000/12,500) = $500,000

Variable Cost under Flexible Budget = Sales Volume under Actual Results x (Variable Costs under Static Budget / Sales Volume under Static Budget)
=> 10,000 * ($300,000 / 12,500) = $240,000

Fixed Cost under Flexible Budget = Fixed Cost under Static Budget