1.) SkyChefs, Inc., prepares in-flight meals for a number ofmajor airlines. One of the company’s products is grilled salmon indill sauce with baby new potatoes and spring vegetables. During themost recent week, the company prepared 7,000 of these meals using2,700 direct labor-hours. The company paid its direct labor workersa total of $27,000 for this work, or $10.00 per hour.
According to the standard cost card for this meal, it shouldrequire 0.40 direct labor-hours at a cost of $9.30 per hour.
Required:
1. What is the standard labor-hours allowed (SH) to prepare7,000 meals?
2. What is the standard labor cost allowed (SH × SR) to prepare7,000 meals?
3. What is the labor spending variance?
4. What is the labor rate variance and the labor efficiencyvariance?
(For requirements 3 and 4, indicate the effect of eachvariance by selecting "F" for favorable, "U" for unfavorable, and"None" for no effect (i.e., zero variance). Input all amounts aspositive values. Do not round intermediatecalculations.)
2.)
The Gourmand Cooking School runs short cooking courses at itssmall campus. Management has identified two cost drivers it uses inits budgeting and performance reports—the number of courses and thetotal number of students. For example, the school might run twocourses in a month and have a total of 62 students enrolled inthose two courses. Data concerning the company’s cost formulasappear below:
| Fixed Cost per Month | Cost per Course | Cost per
Student |
| Instructor wages | | | $ | 2,950 | | | |
| Classroom supplies | | | | | $ | 290 | |
| Utilities | $ | 1,240 | $ | 55 | | | |
| Campus rent | $ | 5,200 | | | | | |
| Insurance | $ | 2,400 | | | | | |
| Administrative expenses | $ | 3,800 | $ | 40 | $ | 6 | |
|
For example, administrative expenses should be $3,800 per monthplus $40 per course plus $6 per student. The company’s sales shouldaverage $860 per student.
The company planned to run four courses with a total of 62students; however, it actually ran four courses with a total ofonly 54 students. The actual operating results for September appearbelow:
| Actual |
| Revenue | $ | 50,420 |
| Instructor wages | $ | 11,080 |
| Classroom supplies | $ | 17,830 |
| Utilities | $ | 1,870 |
| Campus rent | $ | 5,200 |
| Insurance | $ | 2,540 |
| Administrative expenses | $ | 3,758 |
|
Required:
1. Prepare the company’s planning budget for September.
2. Prepare the company’s flexible budget for September.
3. Calculate the revenue and spending variances forSeptember.
3.)
Dawson Toys, Ltd., produces a toy called the Maze. The companyhas recently created a standard cost system to help control costsand has established the following standards for the Maze toy:
Direct materials: 7 microns per toy at $0.34 per micron
Direct labor: 1.2 hours per toy at $7.20 per hour
During July, the company produced 4,900 Maze toys. The toy'sproduction data for the month are as follows:
Direct materials: 70,000 microns were purchased at acost of $0.32 per micron. 27,125 of these microns were still ininventory at the end of the month.
Direct labor: 6,280 direct labor-hours were worked at acost of $49,612.
Required:
1. Compute the following variances for July: (Indicatethe effect of each variance by selecting "F" for favorable, "U" forunfavorable, and "None" for no effect (i.e., zero variance). Inputall amounts as positive values. Do not round intermediatecalculations. Round final answers to the nearest whole dollaramount.)
a. The materials price and quantity variances.
b. The labor rate and efficiency variances.
4.)
You have just been hired by FAB Corporation, the manufacturer ofa revolutionary new garage door opening device. The president hasasked that you review the company’s costing system and “do what youcan to help us get better control of our manufacturing overheadcosts.” You find that the company has never used a flexible budget,and you suggest that preparing such a budget would be an excellentfirst step in overhead planning and control.
After much effort and analysis, you determined the followingcost formulas and gathered the following actual cost data forMarch:
| Cost Formula | Actual Cost in March |
| Utilities | $17,000 plus $0.21 per machine-hour | $ | 22,370 |
| Maintenance | $38,900 plus $2.00 per machine-hour | $ | 66,700 |
| Supplies | $0.70 per machine-hour | $ | 11,700 |
| Indirect labor | $94,800 plus $1.90 per machine-hour | $ | 128,000 |
| Depreciation | $68,100 | $ | 69,800 |
|
During March, the company worked 15,000 machine-hours andproduced 9,000 units. The company had originally planned to work17,000 machine-hours during March.
Required:
1. Prepare a flexible budget for March.
2. Prepare a report showing the spending variances forMarch.
