Variable Cost and Net Operating Income
TCO B Questions
1. (TCO C) The following overhead data are for a department of a large company. Actual costs Static Incurred budget
Activity level (in units) 800 750
Variable costs: Indirect materials $6,850 $6,600 Electricity $1,312 $1,275
Fixed costs: Administration $3,570 $3,700 Rent $3,320 $3,200
Required: Construct a flexible budget performance report that would be useful in assessing how well costs were controlled in this department.
(Points : 30)
2. (TCO D) Mr. Earl Pearl, Accountant for Margie Knall, Inc. has prepared the following product-line income data: PRODUCT
Total A B C
Sales................................................$ 100,000........$50,000.........$20,000...........$30,000
Variable Expenses.............................. 60,000..........30,000............10,000.............20,000
Contribution Margin............................. .40,000..........20,000............10,000.............10,000
Fixed Expenses:
Rent................................................. .5,000...........2,500..............1,000...............1,500
Depreciation..................................... 6,000...........3,000..............1,200................1,800
Utilities.............................................4,000...........2,000.................500................1,500
Supervisors' salaries....................... 5,000..........
1. (TCO C) The following overhead data are for a department of a large company. Actual costs Static Incurred budget
Activity level (in units) 800 750
Variable costs: Indirect materials $6,850 $6,600 Electricity $1,312 $1,275
Fixed costs: Administration $3,570 $3,700 Rent $3,320 $3,200
Required: Construct a flexible budget performance report that would be useful in assessing how well costs were controlled in this department.
(Points : 30)
2. (TCO D) Mr. Earl Pearl, Accountant for Margie Knall, Inc. has prepared the following product-line income data: PRODUCT
Total A B C
Sales................................................$ 100,000........$50,000.........$20,000...........$30,000
Variable Expenses.............................. 60,000..........30,000............10,000.............20,000
Contribution Margin............................. .40,000..........20,000............10,000.............10,000
Fixed Expenses:
Rent................................................. .5,000...........2,500..............1,000...............1,500
Depreciation..................................... 6,000...........3,000..............1,200................1,800
Utilities.............................................4,000...........2,000.................500................1,500
Supervisors' salaries....................... 5,000..........