BIBd Pract 9 Problem Val x Secure http://blackboard uafs.edu/bbc webdav/pid-4981

Question

BIBd Pract 9 Problem Val x Secure http://blackboard uafs.edu/bbc webdav/pid-498118-dt content d 10949511_1/courses 201801 ACCT2813jwight group BIB %20Pract%209%20P oblem%2 Valentine Coffees has provided the following cost formulas and actual results for the month of June: Fixed ElementVariable ElementActual Total per Month per Liter for June Revenue Raw materials Wages Utilities Rent ? 20.00 $ 122,540 5.45 36,030 2.20 20,200 1.00 $ 9,100 $ 3,400 $2,150 1.15 $ 8,050 $6,400 $ 2,430 $ 3,400 Insurance 2,150 Miscellaneous$730 $ While coffee is sold by the cup, the shop measures its activity in terms of the total number of liters of coffee sold. For example, wages should be $6,400 plus $2.20 per liter of coffee sold and the actual wages for June were $20,200. Valentine expected to sell 6,300 liters in June, but actually sold 6,500 liters. Required: Calculate the following: (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) 1. What amount of revenue should be included in Valentine's Flexible Budget?

Explanation / Answer

1 Revenue to be reported in flexible budget=Liters actually sold*revenue per liter=6500*20=$ 130000 2 Wages to be reported in planning budget=Fixed element per month+(Liters expected to be sold*Wages per liter)=6400+(6300*2.20)=$ 20260 3 Wages to be reported in flexible budget=Fixed element per month+(Liters actually sold*Wages per liter)=6400+(6500*2.20)=$ 20700 4 Activity variance for wages=(2)-(3)=20260-20700=440 U 5 Spending variance for wages=(3)-Actual wages=20700-20200=500 F 6 Flexible budget performance report Planning Budget Flexible Budget Activity Variance Actual Results Revenue and spending variance Revenue 126000 130000 4000 F 122540 7460 U (6300*20) Expenses: Raw materials 34335 35425 1090 U 36030 605 U (6300*5.45) (6500*5.45) Wages 20260 20700 440 U 20200 500 F Utilities 8730 8930 200 U 9100 170 U 2430+(6300*1) 2430+(6500*1) Rent 3400 3400 0 3400 0 Insurance 2150 2150 0 2150 0 Miscellaneous 7975 8205 230 U 8050 155 F 730+(6300*1.15) 730+(6500*1.15) Total expenses 76850 78810 1960 U 78930 120 U Net income 49150 51190 2040 F 43610 7580 U

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