Question

Item 20

The Charade Corporation is preparing its Manufacturing Overhead budget for the fourth quarter of the year. The budgeted variable manufacturing overhead is $4 per direct labor-hour; the budgeted fixed manufacturing overhead is $84,000 per month, of which $15,900 is factory depreciation.

If the budgeted direct labor time for November is 7,900 hours, then the total budgeted manufacturing overhead for November is:

Multiple Choice

• $84,000
• $99,700
• $131,500
• $115,600

20B.

Dermody Snow Removal's cost formula for its vehicle operating cost is $2,910 per month plus $321 per snow-day. For the month of December, the company planned for activity of 16 snow-days, but the actual level of activity was 14 snow-days. The actual vehicle operating cost for the month was $8,320. The spending variance for vehicle operating cost in December would be closest to:

rev: 11_08_2017_QC_CS-108685, 11_29_2017_QC_CS-110702

Multiple Choice

• $274 U
• $274 F
• $916 U
• $916 F

20C.

Canniff Air uses two measures of activity, flights and passengers, in the cost formulas in its budgets and performance reports. The cost formula for plane operating costs is $57,410 per month plus $2,652 per flight plus $9 per passenger. The company expected its activity in February to be 76 flights and 288 passengers, but the actual activity was 75 flights and 289 passengers. The actual cost for plane operating costs in February was $257,930. The plane operating costs in the planning budget for February would be closest to:

Multiple Choice

• $261,554
• $260,582
• $258,911
• $257,930

Answer 1

20) $99,700

Budgeted variable manufacturing expense = $4*7,900 = $31,600

Fixed manufacturing expenses exclude depreciation = $84,000-15,900 =$$68,100

Total budgeted manufacturing overhead = $99,700

20B) (a) $274U

Spenidng variance is nothing but difference between actual and budgeted figures .

If Actual expenses are morethan budgetes expenses then unfavourable variance and vice versa

Budgeted = $2,910 + $321 *16 = $8,046

Actual = $8,320

Actual expenses are morethan budgeted , then unfavourable spending variance = $8,046-8,320 =$274U

20C) $258,911

Budgeted cost = $57,410+$2,652*75+$9*289 =$57,410+ 198900+2601 = $258,911

Actual cost $257,930

We will take actual figures of flights and passengers since at the time of planning budget we must know about february figures.

I hope this will help you.