1) Pratte Boat Wash\'s cost formula for its cleaning equipment and supplies is $

Question

1) Pratte Boat Wash's cost formula for its cleaning equipment and supplies is $2,580 per month plus $49 per boat. For the month of April, the company planned for activity of 54 boats, but the actual level of activity was 12 boats. The actual cleaning equipment and supplies for the month was $3,250. The activity variance for cleaning equipment and supplies in April would be?

2) Dubberly Corporations cost formula for its manufacturing overhead is $31,400 per month plus $56 per machine hour. For the month of March, the company planned for activity of 8,060 machine-hours but the actual level of activity was 7,960 machine-hours. The actual manufacturing overhead for the month was $506,130. The spending variance for manufacturing overhead in March would be closest to?

3) Jannush Corporation makes one product. Budgeted unit sales for July, August, September, and October are 10,000, 11,600, 13,300, and 12,700 units, respectively. The ending finished goods inventory should equal 20% of the following month's sales. The budgeted required produciton for August is?

4) Fiwrt Corporation manufactures and sells stainless steel coffee mugs. Expected mug sales Fiwrt in units for the next three months are: October 30,000, November 36,000, December 34,000. Fiwrt likes to maintain a finished goods inventory equal to 30% of the next month's estimated sales. How many mugs should Fiwrt plan on producing during the month of November?

Explanation / Answer

Answer to Question 1:

Cost formula for Cleaning Equipment and Supplies = $2,580 + $49 per boat

Actual level of Activity = 12 boats

Flexible Budget for Cleaning Equipment and Supplies = $2,580 + $49 * 12
Flexible Budget for Cleaning Equipment and Supplies = $3,168

Planning level of Activity = 54 boats

Planning Budget for Cleaning Equipment and Supplies = $2,580 + $49 * 54
Planning Budget for Cleaning Equipment and Supplies = $5,226

Activity Variance for Cleaning Equipment and Supplies = Planning Budget for Cleaning Equipment and Supplies - Flexible Budget for Cleaning Equipment and Supplies
Activity Variance for Cleaning Equipment and Supplies = $5,226 - $3,168
Activity Variance for Cleaning Equipment and Supplies = $2,058 Favorable

Answer to Question 2:

Cost formula for Manufacturing Overhead = $31,400 + $56 per machine-hour

Actual level of Activity = 7,960 machine-hours

Flexible Budget for Manufacturing Overhead = $31,400 + $56 * 7,960
Flexible Budget for Manufacturing Overhead = $477,160

Spending Value for Manufacturing Overhead = Actual Manufacturing Overhead - Flexible Budget for Manufacturing Overhead
Spending Value for Manufacturing Overhead = $506,130 - $477,160
Spending Value for Manufacturing Overhead = $28,970

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