GB 519 MEASUREMENT & DECISION MAKING - ASSIGNMENT DUE TODAY - NEED YOUR ASSISTANCE. SPREADSHEETS ARE ATTACHED.

Problem 6-27 - Preparing flexible budgets (CMA adapted) Name: Course: Date: Barnes Entertainment Corporation prepared a master budget for the month of November that was based on sales of 150,000 board games. The budgeted income statement for the period is as follows. Revenue Variable expenses Direct materials Direct labor Variable overhead Total variable expenses Contribution margin Fixed overhead Fixed selling and administrative expenses Total fixed expenses Operating income $2,400,000 $675,000 300,000 450,000 1,425,000 975,000 250,000 500,000 750,000 $225,000 During November, Barnes produced and sold 180,000 board games. Actual results for the month are as follows. Revenue Variable expenses Direct materials Direct labor Variable overhead Total variable expenses Contribution margin Fixed overhead Fixed selling and administrative expenses Total fixed expenses Operating income $2,870,000 $798,000 375,000 550,000 1,723,000 1,147,000 270,000 500,000 770,000 $377,000 Required a. Prepare a flexible budget for November. Here's one way you could solve this problem: Revenue Less variable costs Direct material Direct labor Variable overhead Total variable costs Contribution margin Less fixed costs Overhead Selling and administrative Total fixed costs Operating income Unit [Formula] 180,000 games [Formula] [Formula] [Formula] [Formula] [Formula] [Formula] [Formula] [Formula] [Formula] [Formula] [Formula] [Figure] [Figure] [Formula] [Formula] Or solve your own way: b. Calculate Barnes' static budget variance for November. Solve: c. Will the static budget variance that you calculated in part (b) be useful to management? Why or why not? Answer: d. Based on the available information, prepare a report for management. Solve: e. Comment on the results of your report. Answer: Problem 6-31 - Comprehensive flexible budgets and variance analysis Name: Course: Date: Pressure Reducers, Inc., produces and sells lumbar support cushions for office chairs using a special foam that molds to a person's back. Since all products are made to order, the only inventory the company maintains is raw materials. Thus, all costs of production are recognized in the period in which they are incurred. The following annual performance report was prepared from the company's accounting records: Units sold Sales revenue Cost of goods sold Gross margin Selling and administrative expenses Operating income Actual 14,500 $2,972,500 2,051,000 921,500 288,625 $632,875 Budget 15,000 $3,000,000 2,075,000 925,000 290,000 $635,000 Actual $195,000 140,000 Variance (500 U) ($27,500 U) (24,000 F) (3,500 U) (1,375 F) ($2,125 U) Budget $200,000 140,000 The following fixed costs are included in these amounts. Cost of goods sold Selling and administrative expenses Hank Martinez, Pressure Reducers' CFO, used the following standard cost card in preparing the budget and thought he had done a good job estimating production and sales. He wonders why the variable cost of goods sold deviated from that budget. Standard Quantity per Unit Direct material Direct labor Variable overhead 10 yards 5 hours 5 hours Standard Price $5 per yard $8 per DLH $7 per DLH Total Cost per Unit $50 40 35 $125 Actual variable costs incurred during the year were as follows. Direct material purchased and used (133,400 yards @ $5.25) Direct labor cost incurred (79,750 DLH @ $7.80) Variable overhead costs incurred $700,350 622,050 533,600 $1,856,000 Required a. Prepare a performance report that isolates Pressure Reducers' flexible budget and sales volume variances. Here's one way you could solve this problem: Unit sales Sales revenue Less variable expenses: Cost of goods sold Selling & administrative Contribution margin Less fixed expenses: Cost of goods sold Selling & administrative Total fixed expenses Operating profit Actual Results [Figure] [Figure] Flexible Budget Variance [Formula] [Formula] Flexible Budget [Formula] [Formula] Sales Volume Variance [Formula] [Formula] Static Budget [Figure] [Figure] [Figure] [Figure] [Formula] [Formula] [Formula] [Formula] [Formula] [Formula] [Formula] [Formula] [Formula] [Formula] [Formula] [Formula] [Formula] [Formula] [Figure] [Figure] [Formula] [Formula] [Figure] [Figure] [Formula] [Formula] [Formula] [Formula] [Formula] [Formula] [Formula] [Formula] [Formula] [Formula] [Formula] [Formula] [Formula] [Formula] [Figure] [Figure] [Formula] [Formula] Or solve your own way: b. Calculate the direct materials price and quantity variances. Solve: c. Calculate the direct labor rate and efficiency variances. Solve: d. Calculate the variable overhead spending and efficiency variances. Solve: e. Show that the direct materials, direct labor, and variable overhead variances equals the flexible budget variance for variable cost of goods sold in part (a). Solve: f. Prepare a memo to Hank Martinez explaining why the actual variable cost of goods sold differed from the budgeted amount. Answer: F U Problem 6-32 - Comprehensive variance calculations (CMA adapted) Name: Course: Date: Gerald/Brooke, Ltd. manufactures shirts, which it sells to customers for embroidering with various slogans and emblems. The standard cost card for the shirts is as follows. Standard Price $1.60 per yard $12 per DLH $4 per DLH $6 per DLH Direct materials Direct labor Variable overhead Fixed overhead Standard Quantity 1.25 yards 0.25 DLH 0.25 DLH 0.25 DLH Standard Cost $2.00 3.00 1.00 1.50 $7.50 Bobby Brickley, operations manager, was reviewing the results for November when he became upset by the unfavorable variances he was seeing. In an attempt to understand what had happened, Bobby asked CFO Lila Davis for more information. She provided the following overhead budgets, along with the actual results for November. The company purchased and used 115,000 yards of fabric during the month. Fabric purchases during the month were made at $1.45 per yard. The direct labor payroll ran $248,050, with an actual hourly rate of $12.10 per direct labor hour. The annual budgets were based on the production of 1,000,000 shirts, using 250,000 direct labor hours. Though the budget for November was based on 80,000 shirts, the company actually produced 82,000 shirts during the month. Variable Overhead Budget Annual Budget $450,000 300,000 200,000 50,000 $1,000,000 Indirect material Indirect labor Equipment repair Equipment power Total Per Shirt $0.45 0.30 0.20 0.05 $1.00 November - Actual $36,000 33,700 16,400 12,300 $98,400 Fixed Overhead Budget Annual Budget $260,000 350,000 80,000 320,000 210,000 280,000 $1,500,000 Supervisory salaries Insurance Property taxes Depreciation Utilities Quality inspection Total November - Actual $22,000 29,500 6,500 34,000 21,600 29,900 $143,500 Required a. Calculate the direct materials price and quantity variances for November. Here's one way you could solve this problem: AQ x AP AQ x SP SQ x SP [Figure] x [Figure] = [Formula] [Figure] x [Figure] = [Formula] [Formula] x [Figure] = [Formula] [Formula] Direct material price variance [Formula] Direct material quantity variance Or solve your own way: b. Calculate the direct labor rate and efficiency variances for November. Solve: c. Calculate the variable overhead spending and efficiency variances for November. Solve: d. Calculate the fixed overhead spending variance for November. Solve: e. Provide an explanation for each variance you calculated. Answer: f. Which of these variances should Bobby be held responsible for? Why