Question

QUESTION 1:

TB Problem Qu. 9-398 During September, Clendennen Corporation budgeted for...

During September, Clendennen Corporation budgeted for 37,000 customers, but actually served 35,000 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served:

Revenue: $4.50q

Wages and salaries: $36,200 + $1.83q

Supplies: $0.73q

Insurance: $13,200

Miscellaneous expense: $6,200 + $0.23q

Required:

Prepare the company's flexible budget for September based on the actual level of activity for the month.

Actual customers served: 35,000

Revenue: _________

Expenses

Wages and salaries: ________

Supplies: ________

Insurance: __________

Miscellaneous expense: ________

Total expenses: __________

Net operating income: __________

QUESTION 2:

Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below:

	Standard Quantity or Hours		Standard Price or Rate			Standard Cost
Direct materials	4.6	pounds	$	2.50	per pound	$	11.50
Direct labor	0.2	hours	$	18.00	per hour	$	3.60

During the most recent month, the following activity was recorded:

1. Twenty thousand pounds of material were purchased at a cost of $2.35 per pound.

2. All of the material purchased was used to produce 4,000 units of Zoom.

3. 750 hours of direct labor time were recorded at a total labor cost of $14,925.

Required:

1. Compute the materials price and quantity variances for the month.

2. Compute the labor rate and efficiency variances for the month.

(For all requirements, 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. Do not round intermediate calculations.)

Materials price variance
Materials quantity variance
Labor rate Variance
Labor efficiency variance

Answer 1

1
Actual customers served	35000
Revenue	157500	=35000*4.5
Expenses:
Wages and salaries	100250	=36200+(35000*1.83)
Supplies	25550	=35000*0.73
Insurance	13200
Miscellaneous expense	14250	=6200+(35000*0.23)
Total expenses	153250
Net operating income	4250

2

Materials price variance	3000	F	=20000*(2.35-2.5)
Materials quantity variance	4000	U	=2.5*(20000-4000*4.6)
Labor rate Variance	1425	U	=14925-(750*18)
Labor efficiency variance	900	F	=18*(750-4000*0.2)