1.The manufacturing overhead budget at Latronica Corporation is based on budgete
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Question
1.The manufacturing overhead budget at Latronica Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 6,400 direct labor-hours will be required in August. The variable overhead rate is $8.80 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $119,680 per month, which includes depreciation of $24,930. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for August should be:
$8.80
$24.00
$27.50
$18.70
2.
Galante Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted as one tenant-day. During May, Kennel budgeted for 3,600 tenant-days, but its actual level of activity was 3,580 tenant-days. Kennel has provided the following data concerning the formulas used in its budgeting and its actual results for May:
Data used in budgeting:
Fixed element
per month
Variable element per tenant-day
Revenue
—
$30.10
Wages and salaries
$2,600
$6.10
Food and supplies
800
10.90
Facility expenses
7,600
3.10
Administrative expenses
7,400
0.10
Total expenses
$18,400
$20.20
Actual results for May:
Revenue
$107,380
Wages and salaries
$23,460
Food and supplies
$36,786
Facility expenses
$19,210
Administrative expenses
$9,132
The net operating income in the planning budget for May would be closest to:
$17,042
$17,240
$18,792
$18,698
3.
Matt Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 8,000 units and of Product B is 6,500 units. There are three activity cost pools, with total cost and total activity as follows:
Total Activity
Activity Cost Pool
Total Cost
Product A
Product B
Total
Activity 1
$29,465
160
550
710
Activity 2
$44,400
810
300
1,110
Activity 3
$117,000
800
3,700
4,500
The activity-based costing cost per unit of Product A is closest to: (Round your intermediate calculations to 2 decimal places.)
$12.42 per units
$5.08 per units
$7.48 per units
$1.28 per units
4.
Schlick Framing's cost formula for its supplies cost is $1,780 per month plus $12 per frame. For the month of August, the company planned for activity of 618 frames, but the actual level of activity was 626 frames. The actual supplies cost for the month was $9,670. The activity variance for supplies cost in August would be closest to:
$96 U
$474 U
$96 F
$474 F
5.
Thomasson Air uses two measures of activity, flights and passengers, in the cost formulas in its budgets and performance reports. The cost formula for plane operating costs is $36,310 per month plus $2,072 per flight plus $1 per passenger. The company expected its activity in April to be 91 flights and 241 passengers, but the actual activity was 90 flights and 246 passengers. The actual cost for plane operating costs in April was $220,010. The activity variance for plane operating costs in April would be closest to:
$5,093 U
$2,067 F
$2,067 U
$5,093 F
1.The manufacturing overhead budget at Latronica Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 6,400 direct labor-hours will be required in August. The variable overhead rate is $8.80 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $119,680 per month, which includes depreciation of $24,930. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for August should be:
Explanation / Answer
1) Predetermined overhead rate = $8.8 + [$119680 / 6400] = $27.50
2) Net Operating Income = Revenue - [Wages & Salaries + Food & Supplies + Facility expenses + Administrative
expenses]
= $107380 - [$23460 + $36786 + $19210 + $9132]
= $18792
3) Cost Allocated to Product A based on driver =
Activity 1 = $29465 * 160 / 710 = $6640
Activity 2 = $44400 * 810 / 1110 = $32400
Activity 3 = $117000 * 800 / 4500 = $20800
Total cost of product A = $6640 + $32400 + $20800 = $59840
Total cost per unit for product A = $59840 / 8000 = $7.48
4) Budgeted cost = $1780 + [$12 * 618] = $9196
Actual cost = $9670
Activity variance = $9196 - $9670 = -$474 ie. $474 U
5) Budgeted cost = $36310 + ($2072 * 91) + ($1 * 241) = $225103
Actual cost = $220010
Activity variance = $225103 - $220010 = $5093 ie. $5093 F
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