Chapter 24
CHAPTER 24
PROBLEMS AND CASE
PROBLEM 24-1
Annual
Budget
$18,000
Gasoline
Oil, minor
5,626
repairs ..
Outside repairs 4,500
Insurance
28,000
Salaries &
90,000
benefits
Depreciation
66,000
202,125
Total miles
375,000
Cost per mile $0.539
No. of Cars
15
One-Month
Budget
1,500
April Varianc
Actual
e
1,720
220
469
550
81
375
1,500
495
1,600
120
100
7,500
7,500
5,500
16,844
31,250
$0.539
15
5,867
17,732
35,000
$0.507
16
367
888
Required:
Employing flexible budgeting techniques, prepare a report that shows budgeted amounts, actual cost, and monthly variation for April
Explain briefly the basis of your budget figure for outside repairs
Assumptions
15 automobile in the pool
25,000 miles per year / automobile
25 miles per gallon / automobile
$1.20 per gallon of gas
$0.0015 per mile for oil, repairs, parts and supplies
$300 per automobile in outside repairs
Supporting Calculations
Gasoline =
31,250 miles
25 mile/gal.
Oil, minor repairs .. =
Outside repairs =
Insurance:
x 1.20 per gallon = $1,500
21,250 miles x $015 per mile = $469
300 per auto x 16 autos
12 months
Annual cost for one auto =
=
= $400
$18,000 / 15 autos
$1,200 per auto
Annual cost for 16 autos = $16 x 1,200 = $19,200
Monthly Cost =
Depreciation:
19,200/12 = $1,600
Annual depreciation per auto =
$66,000/15 = $4,400/auto
Annual depreciation for 16 auto = $4,400/auto x 16 = $70,400
70,400
Monthly depreciation =
= $5,867
12
Flexible Budget
Gasoline
Oil, minor repairs ..
Outside repairs
Insurance
Salaries & benefits Depreciation
Total miles
Cost per mile
No. of Cars
One-Month
Budget
1,500
1,500
April Actual Variance
1,720
220
469
469
550
81
375
1,500
400
1,600
495
1,600
95
0
7,500
7,500
7,500
0
5,867
17,732
35,000
$0.507
16
0
5,500
5,867
16,844 17,336
31,250 31,250
$0.539 $0.5548
15
16
PROBLEM 24-2
EXPENSES
(percent of sales)
ASSETS
Cash
$14,000
COGS
60
Inventory
29,000
Bad debts
2
Land
31,000
Variable selling expense
14
PROBLEMS AND CASE
PROBLEM 24-1
Annual
Budget
$18,000
Gasoline
Oil, minor
5,626
repairs ..
Outside repairs 4,500
Insurance
28,000
Salaries &
90,000
benefits
Depreciation
66,000
202,125
Total miles
375,000
Cost per mile $0.539
No. of Cars
15
One-Month
Budget
1,500
April Varianc
Actual
e
1,720
220
469
550
81
375
1,500
495
1,600
120
100
7,500
7,500
5,500
16,844
31,250
$0.539
15
5,867
17,732
35,000
$0.507
16
367
888
Required:
Employing flexible budgeting techniques, prepare a report that shows budgeted amounts, actual cost, and monthly variation for April
Explain briefly the basis of your budget figure for outside repairs
Assumptions
15 automobile in the pool
25,000 miles per year / automobile
25 miles per gallon / automobile
$1.20 per gallon of gas
$0.0015 per mile for oil, repairs, parts and supplies
$300 per automobile in outside repairs
Supporting Calculations
Gasoline =
31,250 miles
25 mile/gal.
Oil, minor repairs .. =
Outside repairs =
Insurance:
x 1.20 per gallon = $1,500
21,250 miles x $015 per mile = $469
300 per auto x 16 autos
12 months
Annual cost for one auto =
=
= $400
$18,000 / 15 autos
$1,200 per auto
Annual cost for 16 autos = $16 x 1,200 = $19,200
Monthly Cost =
Depreciation:
19,200/12 = $1,600
Annual depreciation per auto =
$66,000/15 = $4,400/auto
Annual depreciation for 16 auto = $4,400/auto x 16 = $70,400
70,400
Monthly depreciation =
= $5,867
12
Flexible Budget
Gasoline
Oil, minor repairs ..
Outside repairs
Insurance
Salaries & benefits Depreciation
Total miles
Cost per mile
No. of Cars
One-Month
Budget
1,500
1,500
April Actual Variance
1,720
220
469
469
550
81
375
1,500
400
1,600
495
1,600
95
0
7,500
7,500
7,500
0
5,867
17,732
35,000
$0.507
16
0
5,500
5,867
16,844 17,336
31,250 31,250
$0.539 $0.5548
15
16
PROBLEM 24-2
EXPENSES
(percent of sales)
ASSETS
Cash
$14,000
COGS
60
Inventory
29,000
Bad debts
2
Land
31,000
Variable selling expense
14