1.

award:
16.66 points

Exercise 8-1 Prepare a Flexible Budget [LO1]

Gator Divers is a company that provides diving services such as underwater ship repairs t
Tampa Bay area. The companys planning budget for March appears below:

Gator Divers
Planning Budget
For the Month Ended March 31
Budgeted diving-hours (q) 350
168,000
Revenue ($480q) $

Expenses:
56,600
Wages and salaries ($11,800 + $128q)
Supplies ($5q) 1,750
Equipment rental ($2,200 + $22q) 9,900
Insurance ($3,800) 3,800
Miscellaneous ($550 + $1.48q) 1,068

73,118
Total expense

94,882
Net operating income $

Required:
During March, the companys activity was actually 340 diving-hours. Prepare a flexible b
level of activity. (Input all amounts as positive values. Round your answers to the n
amount.)

Gator Divers
Flexible Budget
For the Month Ended March 31
Revenue $
Expenses:
Wages and salaries
Supplies
Equipment rental
Insurance
Miscellaneous

Total expense

Net operating income $

View Hint #1
Worksheet Difficulty: Medium
Exercise 8-1 Prepare a Flexible Learning Objective: 08-01 Prepare a
Budget [LO1] flexible budget.

2.
award:
16.66 points

Exercise 8-4 Material Variances [LO4]

Harmon Household Products, Inc., manufactures a number of consumer items for general h
One of these products, a chopping board, requires an expensive hardwood. During a rec
company manufactured 3,000 chopping boards using 2,310 board feet of hardwood. The
the company $17,556.
The companys standards for one chopping board are 0.67 board feet of hardwood, at a
per board foot.

Required:
1 According to the standards, what cost for wood should have been incurred to make 3
a. blocks?
 Total standard cost $

1 How much greater or less is this than the cost that was incurred? (Input the amount
b. value. Leave no cells blank - be certain to enter "0" wherever required. Indicate
variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no ef
variance)

Spending variance $ (Clicktoselect)FUNone

2. Break down the difference computed in (1) above into a materials quantity variance a
price variance.(Input all amounts as positive values. Do not round intermediate
Leave no cells blank - be certain to enter "0" wherever required. Indicate the e
variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no ef
variance)

Materials quantity variance $ (Clicktoselect)FUNone

Materials price variance $ (Clicktoselect)FUNone

View Hint #1
Worksheet Difficulty: Medium
Learning Objective: 08-04 Compute the
direct materials quantity and price
Exercise 8-4 Material Variances [LO4]
variances and explain their
significance.

3.
award:
16.66 points

Exercise 8-5 Direct Labor Variances [LO5]

AirMeals, Inc., prepares in-flight meals for a number of major airlines. One of the compan
stuffed cannelloni with roasted pepper sauce, fresh baby corn, and spring salad. During th
week, the company prepared 7,000 of these meals using 1,640 direct labor-hours. The
these direct labor workers a total of $16,646 for this work, or $10.15 per hour.
According to the standard cost card for this meal, it should require 0.24 direct labor-hou
$9.90 per hour.
Required:
1 According to the standards, what direct labor cost should have been incurred to
a. meals?

Total standard direct labor cost $

1 How much does this differ from the actual direct labor cost? (Input the amount as a p
b. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effe
by selecting "F" for favorable, "U" for unfavorable, and "None" for no effe
variance.). Round your answer to the nearest whole number.)

Spending
$ (Clicktoselect)NoneFU
variance

2. Break down the difference computed in (1) above into a labor efficiency variance an
variance. (Input all amounts as positive values. Do not round intermediate calcu
no cells blank - be certain to enter "0" wherever required. Indicate the effect of
by selecting "F" for favorable, "U" for unfavorable, and "None" for no effe
variance.)

Labor efficiency variance $ (Clicktoselect)UFNone

Labor rate variance $ (Clicktoselect)UFNone

View Hint #1
Worksheet Difficulty: Medium
Learning Objective: 08-05 Compute the
Exercise 8-5 Direct Labor Variances direct labor efficiency and rate
[LO5] variances and explain their
significance.

4.
award:
16.66 points

Exercise 8-7 Planning Budget [LO1]

Auto Lavage is a Canadian company that owns and operates a large automatic carwas
Quebec. The following table provides data concerning the companys costs:
 Cost per
Fixed Cost
Car
per Month
Washed
Cleaning supplies $ 0.50
1,200
Electricity $ $ 0.07
Maintenance $ 0.20
4,200
Wages and salaries $ $ 0.30
8,500
Depreciation $
2,100
Rent $
1,500
Administrative expenses $ $ 0.03

For example, electricity costs are $1,200 per month plus $.07 per car washed. The comp
wash 8,100 cars in October and to collect an average of $6.60 per car washed.

Required:
Prepare the companys planning budget for October. (Input all amounts as positive value

Auto Lavage
Planning Budget
For the Month Ended October 31
Revenue $

Expenses:
Cleaning
supplies
Electricity
Maintenance
Wages and
salaries
Depreciation
Rent
Administrativ
e expenses

Total expense

Net operating $
income

Worksheet Difficulty: Medium

Learning
Exercise 8-7
Objective: 08-01
Planning Budget
Prepare a flexible
[LO1]
budget.

5.
award:
16.66 points

Exercise 8-11 Working Backwards from Labor Variances [LO5]

The Worldwide Credit Card, Inc., uses standards to control the labor time involved in ope
card holders and recording the enclosed remittances. Incoming mail is gathered into b
standard time is set for opening and recording each batch. The labor standards relating to
as follows:

Standard Hours Standard Rate Standard Cost

Per batch 1.80 $ 5.50 $ 9.90

The record showing the time spent last week in opening batches of mail has been mispla
the batch supervisor recalls that 170 batches were received and opened during the w
controller recalls the following variance data relating to these batches:

96
Total labor spending variance $
3 U
Labor rate variance $ 49 F

Required:
1
Determine the number of actual labor-hours spent opening batches during the week.
.

Actual labor-hours hours

2 Determine the actual hourly rate paid to employees for opening batches last week.
. answer to 2 decimal places.)

Actual hourly rate $ per hour

View Hint #1
Worksheet
Exercise 8-11 Working Backwards
from Labor Variances [LO5]
Difficulty: Medium
Learning Objective: 08-05 Compute the
direct labor efficiency and rate
variances and explain their
significance.

6.
award:
16.70 points

Exercise 8-17 Material and Labor Variances [LO4, LO5]

Topper Toys has developed a new toy called the Brainbuster. The company has a standard
help control costs and has established the following standards for the Brainbuster toy:

Direct materials: 6 diodes per toy at $0.31 per diode

Direct labor: 1.4 hours per toy at $6.90 per hour

During August, the company produced 4,600 Brainbuster toys. Production data on the toy fo
follow:

Direct materials: 73,000 diodes were purchased at a cost of $0.27 per diode. 38,500 of thes
still in inventory at the end of the month.
Direct labor: 6,940 direct labor-hours were worked at a cost of $51,356.

Required:
1 Compute the following variances for August: (Input all amounts as positive values.
. your per unit rates, round other intermediate calculations and your final answ
whole dollar. Leave no cells blank - be certain to enter "0" wherever required
effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "
effect (i.e., zero variance).)

a
Direct materials quantity and price variances.
.
 Material quantity variance $ (Clicktoselect)FUNone
Material price variance $ (Clicktoselect)FUNone

b
Direct labor efficiency and rate variances.
.

Labor efficiency variance $ (Clicktoselect)FUNone

Labor rate variance $ (Clicktoselect)FUNone

Learning Objective: 08-05

Worksheet
Exercise 8-17 Material and
Labor Variances [LO4, LO5]
Compute the direct labor
Difficulty: Medium
efficiency and rate variances
and explain their significance.
Learning Objective: 08-04
Compute the direct materials
quantity and price variances
and explain their significance.

2014 McGraw-Hill Education. All rights

reserved.