Week 5 Test Exercises

NAME University of Phoenix: ACC/561 DATE

PHYSICAL UNITS METHOD

SOLVENT A SOLVENT B

PRICE PER GALLON 20 60

GALLONS 20,000 10,000

SALES GALLONS RELATIVE SALES VALUE METHOD VALUE AT SPLIT-OFF POINT SOLVENT A SOLVENT B $400,000 $600,000 20,000 10,000

SALES VALUE AT SPLIT OFF POINT WEIGHTING ALLOCATION OF JOINT COSTS $400,000 (20,000/30,000)*$400,000 $266,666.67 $600,000 (10,000/30,000)*$400,000 $133,333.33

WEIGHTING ALLOCATION OF JOINT COSTS (400,000/1,000,000)*$400,000 $160,000 (600,000/1,000,000)*$400,000 $240,000

NT COSTS

Units Sold 1,400 Units Produced 1,600 Direct Labor $4,200 Direct Materials Used $3,500 Fixed Manufacturing Overhead $2,200 Variable Manufacturing Overhead $300 Selling & Administrative Expenses (All Fixed) $700 Beginning Inventories 0 Contribution Margin $5,600 Direct-Material Inventory, End 800 Cost of Goods Sold Per Unit Fixed Overhead Rate $1.38 Production-Volume Variance ###

Absorption Cost Per Unit

Variable Cost Per Unit

$3.00 $2.50 $1.57 $0.21 $0.50

$2.63 $2.19 $0.19 $0.44

$7.29

$5.00

1. Ending cost finished goods inventory under absorption costing = (Absorption Co 2. Ending cost finished goods inventory cost under variable costing = (Variable Cos

= (Absorption Cost Per Unit * COGS Per Unit) ### g = (Variable Cost Per Unit * Variable### Per Unit) Cost

Full Absorption Method

Sales

Units

Price $17.00 $12.20 $10.17

Total $204,000

Contribution Margin (Unit) $4.80 $6.83

12,000 Actual Production 15,000 Expected Volume Production 18,000

2a. EOY Inventory

3,000 $12.20
$120,000 $63,000

$36,600
$183,000

Manufacturing Costs Incurred Variable Fixed Nonmanufacturing costs incurred Variable Fixed Fixed Overhead Rate Production-Volume Variance

$42,000 $24,000 $18,000

$3.50 -$10,500

2b. Full Absorption Operating Income

$78,600

Variable Costing Method

Units

Price

Total $204,000

Sales ### $17.00 ### $8.00 Actual Production Expected Volume Production### $6.67 Manufacturing Costs Incurred $120,000 Variable $63,000 Fixed Nonmanufacturing costs incurred $24,000 Variable Fixed $18,000

$183,000

$42,000

1. Variable Costing Operating Income

###

2a. Cost Assigned to EOY Inventory = $36,600

### 2b. Full Absorption Operating Income for EOY 20X7 =

Contributio n Margin (Unit) $9.00 $10.33

Factory Overhead Fixed Variable Actual Incurred Budget for standard hours allowed for output achieved Applied Budget for actual hours of input
$14,200 $12,500 $11,600 $12,500 $13,300 $11,000 $11,000 $11,400

Total a. Flexible Budget Variance $4,000 b. Production-Volume Variance 900 $ c. Spending Variance $3,600 d. Efficiency Variance $400

Favorable (F) / Fixed Unfavorable (U) U $1,700 U $900 U $1,700 F NA

Fixed: Variable: Flexible-Budget Variance = $14,200 - $12,500 Flexible-Budget Variance = $13,300 - $1 Production-Volume Variance = $12,500 - 11,600 Production-Volume Variance = $11,000 Spending Variance = $14,200 - $12,500 Spending Variance = $13,300 - $11,400 Efficiency Variance = $12,500 - $12,500 Efficiency Variance = $11,400 - $11,000

Favorable (F) / Favorable (F) / Variable Unfavorable (U) Unfavorable (U) U $2,300 U U U $1,900 U $400 F

riance = $13,300 - $11,000 Variance = $11,000 - $11,000 = $13,300 - $11,400 = $11,400 - $11,000

Budget for actual hours of input Applied Budget for standard hours allowed for actual output achieved Actual incurred

Variable $45,000 $41,000

Fixed ### ###

$48,500

###

1. SPENDING VARIANCE 2. EFFICIENCY VARIANCE

TOTAL OVERHEAD U/F VARIABLE U/F $2,000 U $3,500 U $4,000 U $4,000 U $5,200 $6,000 $1,200 U U U $7,500 $7,500 U U

3. PRODUCTION VOLUME VARIANCE 4. FLEXIBLE-BUDGET VARIANCE 5. UNDERAPPLIED OVERHEAD

Variable: Fixed: Spending Variance = $48,500 - $45,000Spending Variance = $68,500 - $70,000 Efficiency Variance = $45,000 - $41,000 Efficiency Variance = $70,000 - $70,000 Production-Volume Variance = $41,000Production-Volume Variance = $70,000 - $64,800 - $41,000 Flexible-Budget Variance = $48,500 - $41,000 Flexible-Budget Variance = $68,500 - $70,000 Underapplied Overhead = $48,500 - $41,000 Underapplied Overhead = $68,500 - $64,800

FIXED U/F $1,500 F $5,200 $1,500 $3,700 U F U

0 - $70,000 0 - $70,000 = $70,000 - $64,800 $68,500 - $70,000 68,500 - $64,800