Question :
EXERCISES
144.Below a performance report that compares budgeted and actual profit : 1302677
EXERCISES
144.Below is a performance report that compares budgeted and actual profit in the shoe department of Clara Boutique for the month of June:
BudgetActualDifference
Sales$680,000$672,000($8,000)
Less:
Cost of merchandise330,000325,0005,000
Salaries of sales staff120,000 123,000 (3,000)
Controllable profit$230,000 $224,000 ($6,000)
Evaluate the department in terms of its increases or decreases in sales and expenses. Do you believe it would be useful to investigate either or both of the increases in expenses? Explain.
145.The distinction between fixed costs and variable costs is an extremely important concept in managerial accounting. For each of the following phrases, indicate if the phrase is more closely related to fixed costs (FIX) or to variable costs (VAR) in reference to the number of units produced.
_____a.Hourly wages for assembly workers in an food manufacturing firm
_____b.Changes on a per unit basis when the level of production changes
_____c.Depreciation calculated by the straight line method for factory machines
_____d.Monthly rent cost
_____e.Changes in total when the level of production changes
_____f.Wheels used on toy truck by a toy manufacturer
_____g.Janitor’s salary at a factory
_____h.Does not change in total when the level of production changes
_____i.Flour used to produce brownies by a snack manufacturer
_____j.Does not change on a per unit basis when the level of production
changes
146.In a month when Walt Enterprises plans to make and sell 200,000 recycle bins, its total fixed costs are expected to be $420,000 and its total variable costs are expected to be $350,000. If the production level changes to 180,000 units, what is the expected total cost?
147.In a period when North Edge Shirt Company plans to make and sell 55,000 shirts, its total fixed costs are expected to be $108,000, and its total variable costs are expected to be $178,750. If the production level changes to 60,000 units, what is the expected cost per shirt?
148.Identify each of the following statements as fixed costs or variable costs.
______ a.A cost that changes in total with changes in the activity level
______ b.A cost that decreases on a per-unit basis when activity levels increase
______ c.A cost that varies on a per-unit basis with changes in the activity level
______ d.A cost that remains constant per unit with changes in the level of business activity
______ e.A cost that remains the same in total with changes in the activity level
149.Indicate whether each of the following costs is most likely a fixed cost or a variable cost for a car wash company.
______ a.Depreciation on the car wash building
______ b.Car blow dryer depreciation
______ c.Salary of the car wash manager
______ d.Wages of employees who dry the cars
______ e.The cost of water used in car washes
150.Hanover Gears plans to produce 6,000 rotor gears in July. The production budget for this level of activity is:
Labor (variable) $35,000
Rent 6,000
Depreciation 4,000
Materials costs 7,000
Packaging 3,000
Other fixed costs 8,000
Calculate the total cost and the cost per unit if the production level is changed to 5,000 units.
