Reference no: EM13581881
1) List and briefly explain at least three reasons that a company may have significant variances from static budget performance. Then, list and briefly explain at least three reasons for flex budget performance variances.
2) Tyus Company allocates overhead based on machine hours. Estimated overhead costs for the year total $390,000 and the company estimates that it will use 50,000 machine hours during the year. Tyus works 48,000 machine hours during the year and incurs $380,000 of overhead?
- What is the overhead application rate for the year?
- What is the amount of applied overhead for the year?
- What is the amount of under or overapplied overhead for the year? Label over or under.
- Why do you think you got the result you got in c above when overhead was less than expected?
3)At the end of the period, Boyd Company had the following balances in selected accounts:
Raw Materials Inventory $ 90,000
Finished Goods 180,000
Work in Process Inventory 70,000
Cost of Goods Sold 1,000,000
Manufacturing Overhead 100,000 (Dr.)
a)Prepare the journal entry to close the Manufacturing Overhead account if the balance in the account is considered material.
b) Prepare the entry assuming the manufacturing overhead balance is not considered material.
4) Harrell Company sells a single product at a price of $57 per unit. Variable costs per unit are
$35 and total fixed costs are $719,400. Star is considering the purchase of a new piece of equipment that would increase the fixed costs to $1,023,700, but decrease the variable costs per unit to $28.
a.If Star Company expects to sell 40,000 units next year, should they purchase this new equipment?
b. What would Star's volume have to be to change your recommendation in a above?
5)Jamila Company makes 2 products, A and B. Product A has a Contribution Margin per unit of $6.00 and product B has a contribution margin per unit of $11.00. Jamila Company has annual fixed costs of $290,000 units.
Assume that products A and B are sold in a 3:1 mix (3 units of A are sold for each unit of B). How many units of each must be sold to break even?
6) Bly Building Blocks is preparing its budget for 2013. Production for the first quarter will be 600,000 blocks. Production for the subsequent quarters will be 625,000 blocks, 700,000 blocks, and 850,000 blocks.
Each block requires 3.0 pounds of the raw material, blockrock, and each pound of blockrock costs $0.50. Bly will have 325,000 pounds of blockrock on hand at the end of 2012 and wants to have 500,000 pounds of blockrock in inventory at the end of 2013. Ending inventory for blockrock for the first, second, and third quarters will be 340,000 pounds, 360,000 pounds and 450,000 pounds.
Prepare the direct materials budget by quarter and in total for the year 2013.