Introduction To Managerial Accounting
8th Edition
ISBN: 9781259917066
Author: BREWER, Peter C., Garrison, Ray H., Noreen, Eric W.
Publisher: Mcgraw-hill Education,
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Chapter 9, Problem 9E
Prepare a Report Showing Revenue and Spending Variances
Refer to the data for Lavage Rapide in Exercisc 9−7. Also assume that the company’s actual operating results for August are as follows: 
Required: Calculate the company’s revenue and spending variances for August. (Hint: Refer to Exhibit 9-6.)
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Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,300 pounds of oysters in
August. The company's flexible budget for August appears below:
Quilcene Oysteria
Flexible Budget
Actual pounds (q)
Revenue ($4.15q)
Expenses:
Packing supplies ($0.35q)
Oyster bed maintenance ($3,100)
Wages and salaries ($2,500 + $0.35q)
Shipping ($0.60q)
Utilities ($1,210)
For the Month Ended August 31
Other ($400 + $0.019)
Total expenses
Net operating income
Actual pounds
Revenue
The actual results for August were as follows:
Expenses:
Quilcene Oysteria
Income Statement
For the Month Ended August 31
Packing supplies
Oyster bed maintenance
Wages and salaries
Shipping
Utilities
Other
Total expenses
Net operating income
7,300
$ 30,295
2,555
3,100
5,055
4,380
1,210
473
16,773
$ 13,522
7,300
$ 26,600
2,725
2,960
5,465
4,110
1,020
1,093
17,373
$ 9,227
Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,600 pounds of oysters in
August. The company's flexible budget for August appears below:
Quilcene Oysteria
Flexible Budget
For the Month Ended August 31
Actual pounds (g)
7,600
Revenue ($4.05g)
$ 30,780
Expenses:
Packing supplies ($0.40g)
Oyster bed maintenance ($3,400)
Wages and salaries ($2,200 + $0.35q)
Shipping ($0.60g)
Utilities ($1,240)
Other ($410 + $0.01g)
Total expense
3,040
3,400
4,860
4,560
1,240
486
17,586
$ 13,194
Net operating income
The actual results for August appear below:
Quilcene Oysteria
Income Statement
For the Month Ended August 31
Actual pounds
7,600
$ 26,500
Revenue
Expenses:
Packing supplies
Oyster bed maintenance
Wages and salaries
Shipping
Utilities
3,210
3,260
5,270
4,290
1,050
1,106
18,186
$ 8,314
Other
Total expense
Net operating income
You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president
asked you to review the company's costing system and "do what you can to help us get better control of our manufacturing overhead
costs." You find the company has never used a flexible budget, and you suggest preparing such a budget would be an excellent first
step in overhead planning and control.
After much effort and analysis, you estimated the following cost formulas and gathered the following actual cost data for March:
Utilities
Maintenance
Supplies
Indirect labor
Depreciation
Cost Formula
$16,000+ $0.19 per machine-hour
$38,500+ $1.30 per machine-hour
$0.90 per machine-hour
During March, the company worked 20,000 machine-hours and produced 14,000 units. The company originally planned to work
22,000 machine-hours during March.
Required:
1. Calculate the activity variances for March.
2. Calculate the spending variances for March.
$94,800+ $1.70 per…
Chapter 9 Solutions
Introduction To Managerial Accounting
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Ch. 9.A - Comprehensive Standard Cost Variances Flandro...Ch. 9.A - Selection of a Denominator: Overhead Analysis:...Ch. 9.B - Standard Cost Flows: Income Statement Preparation...Ch. 9.B - Standard Cost Flows: Income Statement Preparation...Ch. 9.B - Standard Cost Flows Bowen Company manufactures one...Ch. 9.B - Standard Cost Flows Hartwell Company manufactures...Ch. 9.B - Transaction Analysis; Income Statement Preparation...Ch. 9.B - Transaction Analysis; Income Statement Preparation...Ch. 9 - What is a static planning budget?Ch. 9 - What is a flexible budget and how does it differ...Ch. 9 - What are some of the possible reasons that actual...Ch. 9 - Why is it difficult to interpret a difference...Ch. 9 - What is a revenue variance and what does it mean?Ch. 9 - What is a spending variance and what does it mean?Ch. 9 - What does a flexible budget enable that a simple...Ch. 9 - How does a flexibe budget based on the cost...Ch. 9 - Prob. 9QCh. 9 - Why are separate price and quantity variances...Ch. 9 - Who is generally responsible for the materials...Ch. 9 - Prob. 12QCh. 9 - Prob. 13QCh. 9 - Our workers are all under labor contracts:...Ch. 9 - Prob. 15QCh. 9 - Prob. 16QCh. 9 - Prob. 17QCh. 9 - The Excel worksheet form that appears below is to...Ch. 9 - Prob. 2AECh. 9 - Preble Company manufactures one product. Its...Ch. 9 - Prob. 2F15Ch. 9 - Preble Company manufactures one product. Its...Ch. 9 - Prob. 4F15Ch. 9 - Prob. 5F15Ch. 9 - Prob. 6F15Ch. 9 - Preble Company manufactures one product. Its...Ch. 9 - Prob. 8F15Ch. 9 - Prob. 9F15Ch. 9 - Prob. 10F15Ch. 9 - Prob. 11F15Ch. 9 - Preble Company manufactures one product. Its...Ch. 9 - Prob. 13F15Ch. 9 - Preble Company manufactures one product. Its...Ch. 9 - Preble Company manufactures one product. Its...Ch. 9 - Prepare a Flexible Budget Puget Sound Divers is a...Ch. 9 - Prepare a Report Shong Revenue and Spending...Ch. 9 - Prepare a Flexible Budget with More Than One Cost...Ch. 9 - Direct Materials Variances Bandar Industries...Ch. 9 - Prob. 5ECh. 9 - Prob. 6ECh. 9 - Planning Budget Lavage Rapide is a Canadian...Ch. 9 - EXERCISE 98 Flexible Budget L091 Refer to the data...Ch. 9 - Prepare a Report Showing Revenue and Spending...Ch. 9 - Direct Labor and Variable Manufacturing Overhead...Ch. 9 - Prob. 11ECh. 9 - Working with More Than One Cost Driver The...Ch. 9 - Direct Materials and Direct Labor Variances Huron...Ch. 9 - Direct Materials Variances Refer to the data in...Ch. 9 - Prob. 15ECh. 9 - Prob. 16ECh. 9 - Prob. 17ECh. 9 - Comprehensive Variance Analysis Miller Toy Company...Ch. 9 - More than One Cost Driver Milano Pizza is a small...Ch. 9 - Basic Variance Analysis: the Impact of Vanances on...Ch. 9 - Multiple Products. Materials, and Processes...Ch. 9 - Variance Analysis In a Hospital John Fleming,...Ch. 9 - Flexible Budgets and Spending Variances You have...Ch. 9 - Comprehensive Variance Analysis Marvel Parts....Ch. 9 - Direct Materials and Direct Labor Variances:...Ch. 9 - Comprehensive Variance Analysis Highland Company...
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- ces W Actual pounds (q) Revenue ($4.10g) For the Month Ended August 31 Quilcene Oysteria Flexible Budget Expenses: Packing supplies ($0.30q) Oyster bed maintenance ($3,000) Wages and salaries ($2,400 + $0.30q) Shipping ($0.60q) Utilities ($1,270) Other ($470 + $0.019) Total expense Net operating income The actual results for August appear below: Quilcene Oysteria Income Statement For the Month Ended August 31 Actual pounds Revenue Expenses: Packing supplies Oyster bed maintenance Wages and salaries. Shipping Utilities Other Total expense Net operating income 7,200 $ 27,100 2,330 2,860 4,970 4,050 1,080 1,162 16,452 $ 10,648arrow_forwardLavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides data concerning the company's costs. Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Administrative expenses Rent Actual cars washed Revenue Expenses: Cleaning supplies Electricity Haintenance Hages and salaries Depreciation For example, electricity costs are $1,300 per month plus $0.09 per car washed. The company expects to wash 8,300 cars in August and to collect an average of $6,70 per car washed. The actual operating results for August are as follows: Lavage Rapide Income Statement For the Honth Ended August 31 Rent Fixed Cost per Month Administrative expenses Total expense Net operating income $1,300 $4,700 $8,100 $1,900 $1,700 Cost per Car Washed 0,400 $57,710 5,480 2,017 1,070 7,550 8,100 2,100 1,932 20,249 $ 29,4611 $0.60 $0.09 $0.10 $0.30 $0.04 Required: Calculate the company's revenue and spending variances for…arrow_forwardFlight Café prepares in-flight meals for airlines in its kitchen located next to a local airport. The company's planning budget for July appears below: Flight Café Planning Budget For the Month Ended July 31 Budgeted meals (q) 18,000 Revenue ($4.50g) Expenses: Raw materials ($2.40q) Wages and salaries ($5,200 + $0.30g) Utilities ($2,400 + $0.05q) Facility rent ($4,300) Insurance ($2,300) Miscellaneous ($680 + $0.10q) Total expense $81,000 43, 200 10,600 3,300 4,300 2,300 2,480 66,180 $14,820 Net operating income In July, 17,800 meals were actually served. The company's flexible budget for this level of activity appears below: Flight Café Flexible Budget For the Month Ended July 31 Budgeted meals (q) 17,800 Revenue ($4.50g) Expenses: Raw materials ($2.40g) Wages and salaries ($5,200 + $0.30g) Utilities ($2,400 + $0.05q) Facility rent ($4,300) Insurance ($2,300) Miscellaneous ($680 + $0.10q) Total expense $80,100 42,720 10,540 3,290 4,300 2,300 2,460 65,610 Net operating income $14,490arrow_forward
- You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company's costing system and "do what you can to help us get better control of our manufacturing overhead costs." You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March: Actual Cost in March Cost Formula $20,600 + $0.10 per machine-hour $40,000 + $1.60 per machine-hour $0.30 per machine-hour $24,200 $ 78,100 $8,400 $ 149,600 $ 71,500 Utilities Maintenance Supplies Indirect labor $130,000 + $0.70 per machine-hour Depreciation $70,000 During March, the company worked 26,000 machine-hours and produced 15,000 units. The company had originally planned to work 30,000 machine-hours during March.…arrow_forwardJake's Roof Repair has provided the following data concerning its costs Cost per Repair Hour $15.00 $ 7.70 $0.50 $ 3.50 $ 0.60 Wages and salaries Parts and supplies Equipeent depreciation Truck operating expenses Rent Administrative expenses Fixed Cost per Month $ 21,000 $2,730 $ 5,709 $ 4,020 $3,050 For example, wages and salaries should be $21,000 plus $15.00 per repair-hour. The company expected to work 2.900 repair-hours in May, but actually worked 2.800 repair-hours. The company expects its sales to be $52.00 per repair-hour Required: Compute the company's activity variances for May (Indicate the effect of each variance by selecting "F" for favorable. "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)arrow_forwardYou have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company's costing system and "do what you can to help us get better control of our manufacturing overhead costs." You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March: Actual Cost in March $ 21,670 $ 66,600 $ 6,600 Utilities Maintenance Supplies Indirect labor $94,700+ $1.90 per machine-hour Depreciation $68,000 Cost Formula $0.21 per machine-hour $2.00 per machine-hour $16,300+ $38,800 $0.40 per machine-hour During March, the company worked 15,000 machine-hours and produced 9,000 units. The company had originally planned to work 17,000 machine-hours during March. Required: 1. Calculate…arrow_forward
- You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company's costing system and "do what you can to help us get better control of our manufacturing overhead costs." You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March: Utilities Maintenance Supplies. Indirect labor Depreciation Cost Formula $16,800+ $0.17 per machine-hour $38,600+ $1.90 per machine-hour $0.40 per machine-hour $94,700+ $2.10 per machine-hour $67,700 Actual Cost in March $ 22,850 $ 79,900 $9,800 $ 148, 100 $ 69,400 During March, the company worked 23,000 machine-hours and produced 17,000 units. The company had originally planned to work 25,000 machine-hours during March.…arrow_forward1. Prepare a report showing the conpany's activity variances for July. 2. Which of the activity variances should be of concern to management? Explain.arrow_forwardOverhead Variances and Their Disposal Warner Company has the following data for the past year: Actual overhead Applied overhead: Work-in-process inventory Finished goods inventory Cost of goods sold Total $402,000 $88,000 176,000 176,000 $440,000 Warner uses the overhead control account to accumulate both actual and applied overhead.arrow_forward
- Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides estimates concerning the company's costs: Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Administrative expenses Rent Actual cars washed. For example, electricity costs should be $1,300 per month plus $0.09 per car washed. The company expects to wash 8,000 cars August and to collect an average of $6.90 per car washed. The actual operating results for August are as follows: Lavage Rapide Income Statement For the Month Ended August 31 Revenue Expenses: Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Fixed Cost Cost per Car per Month Washed $ 1,300 $4,100 $ 8,000 $ 1,800 $ 1,700 Administrative expenses Total expense Net operating income 8,100 $ 57,300 $ 0.80 $ 0.09 $0.20 $ 0.30 6,900 1,990 1,840 6,860 8,000 2,000 1,840 29,430 $ 27,870 $ 0.03arrow_forwardWarner Company has the following data for the past year: Warner uses the overhead control account to accumulate both actual and applied overhead. Required: 1. Calculate the overhead variance for the year and close it to cost of goods sold. 2. Assume the variance calculated is material. After prorating, close the variances to the appropriate accounts and provide the final ending balances of these accounts. 3. What if the variance is of the opposite sign calculated in Requirement 1? Provide the appropriate adjusting journal entries for Requirements 1 and 2.arrow_forwardAnker Company had the data below for its most recent year, ended December 31: Required: Prepare a performance report that shows the variances on an item-by-item basis.arrow_forward
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