Author Question: Activity-based costing, batch-level variance analysis Audrina's Fleet Feet, Inc., produces dance ... (Read 64 times)

Cooldude101 · **on:** Jul 6, 2018

Activity-based costing, batch-level variance analysis

Audrina's Fleet Feet, Inc., produces dance shoes for stores all over the world. While the pairs of shoes are boxed individually, they are crated and shipped in batches. The shipping department records both variable direct batch-level costs and fixed batch-level overhead costs. The following information pertains to shipping department costs for 2014.

Required:
1. What is the static budget number of crates for 2014?
2. What is the flexible budget number of crates for 2014?
3. What is the actual number of crates shipped in 2014?
4. Assuming fixed overhead is allocated using crate-packing hours, what is the predetermined fixed overhead allocation rate?
5. For variable direct batch-level costs, compute the price and efficiency variances.
6. For fixed overhead costs, compute the spending and the production-volume variances.

Question 2

Jamie's Lighting Company paid rent for the month, 2,500 . What are the effects on the fundamental accounting equation?
a. Assets increase 2,500; liabilities, no effect; owner's equity increases 2,500.
b. Assets decrease 2,500; liabilities, no effect; owner's equity increases 2,500.
c. Assets decrease 2,500; liabilities, decrease 2,500; owner's equity, no effect.
d. Assets decrease 2,500; liabilities, no effect; owner's equity decreases 2,500.

blakcmamba · **Reply #1 on:** Jul 6, 2018

Answer to Question 1

1. Static budget number of crates = Budgeted pairs shipped / Budgeted pairs per crate
= 225,000/15
= 15,000 crates

2. Flexible budget number of crates = Actual pairs shipped / Budgeted pairs per crate
= 180,000/15
= 12,000 crates

3. Actual number of crates shipped = Actual pairs shipped / Actual pairs per box
= 180,000/10
= 18,000 crates

4. Static budget number of hours = Static budget number of crates budgeted hours per box
= 15,000 0.9 = 13,500 hours

Fixed overhead rate = Static budget fixed overhead / static budget number of hours
= 54,000/13,500
= 4.00 per hour

5. Variable Direct Variance Analysis for Audrina's Fleet Feet, Inc. for 2014

Actual Actual Hours Budgeted Hours Allowed for
Variable Cost Budgeted Rate Actual Output Budgeted Rate
(18,000 1.1 16) (18,000 1.1 18) (12,000 0.9 18)
316,800 356,400 194,400

39,600 F 162,000 U
Price variance Efficiency variance

6. Fixed Overhead Variance Analysis for Audrina's Fleet Feet, Inc. for 2014

Actual Static Budget Budgeted Hours Allowed for
Fixed Overhead Fixed Overhead Actual Output Budgeted Rate
(12,000 0.9 4.0)
56,500 54,000 43,200

2,500 U 10,800 U
Spending variance Production volume variance

Answer to Question 2

D