Summary (latest 2022/2023)1. Tempo Company’s fixed budget (based on sales of 7,000 units) for the first quarter of calendar year 2015 reveals the following. Fixed Budget Sales (7,000 units) $ 2,800,000 Cost of goods sold

(latest 2022/2023)1. Tempo Company’s fixed budget (based on sales of 7,000 units) for the first quarter of calendar year 2015 reveals the following. Fixed Budget Sales (7,000 units) $ 2,800,000 Cost of goods sold Direct materials $ 280,000 Direct labor 490,000 Production supplies 175,000 Plant manager salary 65,000 1,010,000 ________________________________________ ________________________________________ ________________________________________ ________________________________________ Gross profit 1,790,000 Selling expenses Sales commissions 140,000 Packaging 154,000 Advertising 125,000 419,000 ________________________________________ ________________________________________ Administrative expenses Administrative salaries 85,000 Depreciation—office equip. 35,000 Insurance 20,000 Office rent 36,000 176,000 ________________________________________ ________________________________________ ________________________________________ ________________________________________ Income from operations $ 1,195,000 ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________ Complete the following flexible budgets for sales volumes of 6,000, 7,000, and 8,000 units. 2. Solitaire Company’s fixed budget performance report for June follows. The $315,000 budgeted expenses include $294,000 variable expenses and $21,000 fixed expenses. Actual expenses include $27,000 fixed expenses. Fixed Budget Actual Results Variances Sales (in units) 8,400 10,800 ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ Sales (in dollars) $ 420,000 $ 540,000 $ 120,000 F Total expenses 315,000 378,000 63,000 U ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ Income from operations $ 105,000 $ 162,000 $ 57,000 F ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________ Prepare a flexible budget performance report showing any variances between budgeted and actual results. List fixed and variable expenses separately. 3. A manufactured product has the following information for June. Direct labor (2 hrs. @ $16 per hr.) 15,700 hrs. @ $16.50 per hr. Overhead (2 hrs. @ $12 per hr.) $ 198,000 Units manufactured 8,000 ________________________________________ Compute the direct materials price variance and the direct materials quantity variance. Indicate whether each variance is favorable or unfavorable. 4. A manufactured product has the following information for June. Standard Actual Direct materials (6 lbs. @ $8 per lb.) 48,500 lbs. @ $8.10 per lb. Direct labor (2 hrs. @ $16 per hr.) 15,700 hrs. @ $16.50 per hr. Overhead (2 hrs. @ $12 per hr.) $ 198,000 Units manufactured 8,000 ________________________________________ Compute the direct labor rate variance and the direct labor efficiency variance. Indicate whether each variance is favorable or unfavorable. 5. Sedona Company set the following standard costs for one unit of its product for 2015. Direct material (20 Ibs. @ $2.50 per Ib.) $ 50 Direct labor (10 hrs. @ $8.00 per hr.) 80 Factory variable overhead (10 hrs. @ $4.00 per hr.) 40 Factory fixed overhead (10 hrs. @ $1.60 per hr.) 16 ________________________________________ ________________________________________ Standard cost $ 186 ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________ The $5.60 ($4.00 1 $1.60) total overhead rate per direct labor hour is based on an expected operating level equal to 75% of the factory’s capacity of 50,000 units per month. The following monthly flexible budget information is also available. Operating Levels (% of capacity) ________________________________________ Flexible Budget 70% 75% 80% Budgeted output (units) 35,000 37,500 40,000 Budgeted labor (standard hours) 350,000 375,000 400,000 Budgeted overhead (dollars) Variable overhead $ 1,400,000 $ 1,500,000 $ 1,600,000 Fixed overhead 600,000 600,000 600,000 ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ Total overhead $ 2,000,000 $ 2,100,000 $ 2,200,000 ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________ During the current month, the company operated at 70% of capacity, employees worked 340,000 hours, and the following actual overhead costs were incurred. (Do not round intermediate calculations. Round "OH costs per hour" to 2 decimal places.) Variable overhead costs $ 1,375,000 Fixed overhead costs 628,600 ________________________________________ ________________________________________ Total overhead costs $ 2,003,600 ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________ 6. James Corp. applies overhead on the basis of direct labor hours. For the month of May, the company planned production of 8,000 units (80% of its production capacity of 10,000 units) and prepared the following overhead budget: Operating Levels ________________________________________ Overhead Budget 80% Production in units 8,000 Standard direct labor hours 24,000 Budgeted overhead Variable overhead costs Indirect materials $ 15,000 Indirect labor 24,000 Power 6,000 Maintenance 3,000 ________________________________________ ________________________________________ Total variable costs 48,000 ________________________________________ ________________________________________ Fixed overhead costs Rent of factory building 15,000 Depreciation—machinery 10,000 Supervisory salaries 19,400 ________________________________________ ________________________________________ Total fixed costs 44,400 ________________________________________ ________________________________________ Total overhead costs $ 92,400 ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________ During May, the company operated at 90% capacity (9,000 units) and incurred the following actual overhead costs: Overhead Costs Indirect materials $ 15,000 Indirect labor 26,500 Power 6,750 Maintenance 4,000 Rent of factory building 15,000 Depreciation—machinery 10,000 Supervisory salaries 22,000 ________________________________________ ________________________________________ Total actual overhead costs $ 99,250 ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________ 1. Compute the overhead controllable variance. 2. Compute the overhead volume variance. 3. Prepare an overhead variance report at the actual activity level of 9,000 units. 7. Trico Company set the following standard unit costs for its single product. Direct materials (30 Ibs. @ $4 per Ib.) $ 120.00 Direct labor (5 hrs. @ $14 per hr.) 70.00 Factory overhead—variable (5 hrs. @ $8 per hr.) 40.00 Factory overhead—fixed (5 hrs. @ $10 per hr.) 50.00 ________________________________________ ________________________________________ Total standard cost $ 280.00 ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________ The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 60,000 units per quarter. The following flexible budget information is available. Operating Levels ________________________________________ 70% 80% 90% Production in units 42,000 48,000 54,000 Standard direct labor hours 210,000 240,000 270,000 Budgeted overhead Fixed factory overhead $ 2,400,000 $ 2,400,000 $ 2,400,000 Variable factory overhead $ 1,680,000 $ 1,920,000 $ 2,160,000 ________________________________________ During the current quarter, the company operated at 90% of capacity and produced 54,000 units of product; actual direct labor totaled 265,000 hours. Units produced were assigned the following standard costs: Direct materials (1,620,000 Ibs. @ $4 per Ib.) $ 6,480,000 Direct labor (270,000 hrs. @ $14 per hr.) 3,780,000 Factory overhead (270,000 hrs. @ $18 per hr.) 4,860,000 ________________________________________ ________________________________________ Total standard cost $ 15,120,000 ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________ Actual costs incurred during the current quarter follow: Direct materials (1,615,000 Ibs. @ $4.10 per lb.) $ 6,621,500 Direct labor (265,000 hrs. @ $13.75 per hr.) 3,643,750 Fixed factory overhead costs 2,350,000 Variable factory overhead costs 2,200,000 ________________________________________ ________________________________________ Total actual costs $ 14,815,250 ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________ Required: (a) Compute the variable overhead spending and efficiency variances. (b) Compute the fixed overhead spending and volume variances. (c) Compute the total overhead controllable variance.