100% 37 fx BUSAD 202 G H F E D B A a -9 10 11 12 13 14 15 BUSAD 202 Flexible Budgeting and Standard Cost Project Group C Vaughan Company had a dismal 3rd Quarter! Management had wanted to wait until quarter end to do a - post mortem of the annual results and do some investigations if necessary. Here is what actually happened: Total sales were $2,340,000 for 30,000 units. Management failed to be able to buy enough direct materials to produce the required units for ending inventory nor to keep the required direct materials on hand for ending inventory requirements due to a shortage of WHAM during the quarter. Total Production for 3rd quarter was 30,000 units. Vaughan uses LIFO inventory method. Regarding WHAM. Vaughan purchased and used 18,100 pounds at a total cost of $239,010. Vaughan used 60,500 DLH (direct labor hours) to make the 30,000 units at a total labor cost of $895,400. Actual Variable FOH was $121,000 and actual Fixed FOH was $21,000. Even though Production ended up being 30,000 units, the cash borrowings indicated by the static budget dictated that Vaughan borrow money ($174,000) on the last day of August and they did so. They also paid it back at the end of the September as budgeted. Selling and Administrative expenses totaled $303,800. $206,800 was variable and the rest was fixed. We have not covered S&A variances, but never the less, the difference between what actually occurred and what should have happened (the flexible budget) can still be illuminating, In this Google Sheet: (a) Prepare a standard cost card for a widget. (b) Prepare an flexible budget performance report comparing actual production/sales to a flexible budget of such sales/costs (Like #2 on the top of page 842 in our text) (e) Prepare the direct material variances (price and efficiency/quantity) for each material 16 17 18 19 20 21 22 23 24 25 28 27 28 29 30 31 32 33 34 B Flexible Budget and Standard Cost Project Cost Total a. Quantity Standard Cost Card Direct Material WHAM Direct Labor Factory Overhead Total Cost b. Actual Production and Sales Flexible Budget Variance Flexible Budget Units Sales Variable Costs: 7 3 9 20 21 22 23 Direct Materials WHAM Direct Labor Variable FOH Variable S&A Interest Expense Contribution Margin 25 26 Fixed Costs - FOH Fixed Costs - S&A Operating Income c. Direct Material WHAM 6 37 38 40 Quantity Efficiency Price 41 42 43 44 Totals 45 Price Efficiency Total 46 d. Direct Labor 49 50 53 35 Price/Rate Efficiency 54 55 Totals 57 Price Efficiency Total 100% 37 fx BUSAD 202 G H F E D B A a -9 10 11 12 13 14 15 BUSAD 202 Flexible Budgeting and Standard Cost Project Group C Vaughan Company had a dismal 3rd Quarter! Management had wanted to wait until quarter end to do a - post mortem of the annual results and do some investigations if necessary. Here is what actually happened: Total sales were $2,340,000 for 30,000 units. Management failed to be able to buy enough direct materials to produce the required units for ending inventory nor to keep the required direct materials on hand for ending inventory requirements due to a shortage of WHAM during the quarter. Total Production for 3rd quarter was 30,000 units. Vaughan uses LIFO inventory method. Regarding WHAM. Vaughan purchased and used 18,100 pounds at a total cost of $239,010. Vaughan used 60,500 DLH (direct labor hours) to make the 30,000 units at a total labor cost of $895,400. Actual Variable FOH was $121,000 and actual Fixed FOH was $21,000. Even though Production ended up being 30,000 units, the cash borrowings indicated by the static budget dictated that Vaughan borrow money ($174,000) on the last day of August and they did so. They also paid it back at the end of the September as budgeted. Selling and Administrative expenses totaled $303,800. $206,800 was variable and the rest was fixed. We have not covered S&A variances, but never the less, the difference between what actually occurred and what should have happened (the flexible budget) can still be illuminating, In this Google Sheet: (a) Prepare a standard cost card for a widget. (b) Prepare an flexible budget performance report comparing actual production/sales to a flexible budget of such sales/costs (Like #2 on the top of page 842 in our text) (e) Prepare the direct material variances (price and efficiency/quantity) for each material 16 17 18 19 20 21 22 23 24 25 28 27 28 29 30 31 32 33 34 B Flexible Budget and Standard Cost Project Cost Total a. Quantity Standard Cost Card Direct Material WHAM Direct Labor Factory Overhead Total Cost b. Actual Production and Sales Flexible Budget Variance Flexible Budget Units Sales Variable Costs: 7 3 9 20 21 22 23 Direct Materials WHAM Direct Labor Variable FOH Variable S&A Interest Expense Contribution Margin 25 26 Fixed Costs - FOH Fixed Costs - S&A Operating Income c. Direct Material WHAM 6 37 38 40 Quantity Efficiency Price 41 42 43 44 Totals 45 Price Efficiency Total 46 d. Direct Labor 49 50 53 35 Price/Rate Efficiency 54 55 Totals 57 Price Efficiency Total
