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Three Budgeting questions

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Question;Exercise 1;The;following data are the actual results for Marvelous Marshmallow Company for;August.;Actual;output................................................................................................................13,500;cases;Actual;variable overhead.....................................................................................;$607,500;Actual;fixed overhead..........................................................................................;$183,000;Actual;machine time.....................................................................................60,750;machine hours;Standard;cost and budget information for Marvelous Marshmallow Company follows;Standard;variable-overhead rate................................................ 9.00 per;machine hour;Standard;quantity of machine hours.........................................4 hours per;case of marshmallows;Budgeted;fixed overhead........................................................ $180,000;per month;Budgeted;output.....................................................................15,000;cases per month;Required:Build a spreadsheet:Construct an Excel spreadsheet to solve the;preceding requirement. Show how the solution will change if the following;information changes: actual output was 13,350 cases, and actual variable;overhead was $609,000.;Exercise 2.;The;controller for Rainbow Children?s Hospital, located in Munich, Germany;estimates that the hospital uses 25 kilowatt-hours of electricity per;patient-day, and that the electric rate will be ?.13 per kilowatt-hour. The;hospital also pays a fixed monthly charge of ?2,000 to the electric utility to;rent emergency backup electric generators. *;Required:Construct a flexible budget for the hospital?s;electricity costs using each of the following techniques.;1.;Formula flexible budget.;2.;Columnar flexible budget for 30,000, 40,000, and 50,000 patient-days of;activity. List variable and fixed electricity costs separately.;Exercise 3;LakeMaster;Company manufactures outboard motors that are sold throughout the United States;and Canada. The company uses a comprehensive budgeting process and compares;actual results to budgeted amounts on a monthly basis. Each month, LakeMaster?s;accounting department prepares a variance analysis and distributes the report;to all responsible parties. Al Richmond, production manager, is upset about the;results for June. Richmond, who is responsible for the cost of goods;manufactured, has implemented several cost-cutting measures in the;manufacturing area and is discouraged by the unfavorable variance in variable;costs.;When;the master budget was prepared, LakeMaster?s cost accountant, Joan Ballard;supplied the following unit costs: direct material, $90, direct labor, $66;variable overhead, $54, and variable selling, $18.;The;total variable costs of $1,170,000 for June include $480,000 for direct;material, $288,000 for direct labor, $264,000 for variable overhead, and;$138,000 for variable selling expenses. Ballard believes that monthly reports;would be more meaningful to everyone if the company adopted flexible budgeting;and prepared more detailed analyses.;Required;1.;Prepare a flexible budget for LakeMaster Company for the month of June that;includes separate variable-cost budgets for each type of cost (direct material;etc.).;2.;Determine the variance between the flexible budget and actual cost for each;cost item.;3.;Discuss how the revised budget and variance data are likely to impact the;behavior of Al Richmond, the production manager.;4. Construct an;Excel spreadsheetto;solve requirements (1) and (2) above. Show how the solution will change if the;following information changes: actual sales amounted to 4,700 units and actual;fixed overhead was $272,000.

 

Paper#37545 | Written in 18-Jul-2015

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