COST CONCEPTS AND FLOWS

A
.

B 1
. .

C
.

Contribution margin
Controllable margin
Segment margin

117,00
0
92,000
62,000

Direct materials used

Cost of goods
manufactured

88,000
234,00
0

Department 1:
Department 2:
Department 3:

D 1
. .

1 per gallon

2
.

2.67 per gallon

3
.

2.36 per gallon

F
.

Controllable costs
Directly traceable costs
Allocated costs

80,000
150,00
0
2,000,0
00

118,60
0
23,400
7,900

COST BEHAVIOR & COST-VOLUME-PROFIT

ANALYSIS
EXERCISES/PROBLEMS
EX.
1
A
Y = $10x
B
Y = $9.20x
C
Y = $1,000 + $0.05x
D
Y = $200,000 + $75x
EX2

EX3

EX4

EX5

EX6

EX7

EX8

A
B

$33,120 + $68x
$67,120

A
B

$10
$850,000

A
B

60%
$175,000

A
B

$12.50
$4,000,000

FC
VC

$2.556 per DLH

$1,794

A
B

Y = $496,800 + $56.40x
$2,527,200

A
B

$45,600 + $24x
--65,400 +$0.045x

EX9

EX10

EX11

EX12

EX13

EX14

VC
R
FC

5.2%
$412

2.

Cost of sales: VC = 30% of sales,

FC = $340
S&A: VC = 20% of sales, FC =
$150
April $60, May $90

VC
FC

$0.087 mile
$279

A
B
C

$330,900
No.
$24,363

A
B

Y = $35.92 + $563.80X
Goodness of fit is 0.75

A
B
C
D
E
F
G
H
I
J

Fixed cost area

Variable cost area
Profit area
Breakeven point
Loss area
Total cost line
Sales line
Fixed cost line
Y- axis
X=axis

1.

EX15
EX16

$117,600
$114,600
KWH

$2,300,000
A

45%

B
EX17

EX18

1.
2.

3.
4.
EX19

EX20

1.
2.
3.
4.
1.
A
1.
B
1.
C
2.
A
2.
B
2.
C
2.
D
3.
A
3.

$300,000
Option 1: BEP = 1,250, rent =
$15,000
Option 2: BEP = 1,000, rent =
$12,000
Option 3: BEP 800, rent = $9,600
Option 3 from 0 to 1,400 units
Option 2 from 1,401 to 2,000
Option 1 above 2,000
$80,000
FC = $160,000
BEP = $533,333
Margin of safety = $266,667
$50,000
5.55%
$14,881
$13.905 million
$1,953 million

$2.00
$600,000
$230,000
$50,000
$6
25,000
$250,000
10,000
$15

B
3.
C
EX21

EX22.

EX23

$60,000

1.
2.
3.
4.
5.
6.
7.
8.
9.
10
.
11
.

$10
$2.50
24,000
$7,500
48,000 units
$400,000
54,000 units
60,000 units
$10.20

1.
2.
3.
A
3.
B
3.
C
4.
A
4.
B
5.
A
5.
B
5.
C

Gold
Silver

A
B
C
D

24,111
8.29
249%
7.37

$10.357
$625,000

48%
$416,667
$479,167
$400,000
$460,000
$10
20,000
23,000

EX24

EX25

EX26

EX27

EX28

EX29

EX30

A
B
C

1.67
33% increase
$6,000

A
B

$600,000
64%

A
B
C
D

1,800
$6,000
3,000

1.
2.

Alt. 1 = 2,308; Alt. 2 = 3,250

7333

1.
2.
3.
4.

Item (a)
Item (a)
77,778
$5

1.
2.

$460
1,324 hours

A
B
C
D

$13; 52%
45,350
$1,133,750
74,650
$1,866,250
62.21%
1.61; 40.25%
122,000 mice
108,600 mice
45,955 mice
$11,600

E
F
G
H
I

1,300

STANDARD COSTING & VARIANCE ANALYSIS

Problem 1: Standard Setting - Direct Materials
1.
1.90
2.
8.20
3.
15.58
Problem 2: Standard Setting - Direct Materials & Direct
Labor
3.
97.20

Problem 3: Materials & Labor Variances

A
16,575
.
10,000 F
U
B
43,350
.
18,360 F
F
Problem 4: Labor Rate & Efficiency Variances
600 U
6000 U
Problem 5: Labor Spending & Volume Variance
250 U
1,500 F
Problem 6: Labor Variances - Missing Information
Case A Case B
Units produced
750
Standard hours per unit
Standard hours allowed
2,400
Standard rate per hour
10.40
Actual hours worked
Actual labor cost
15,844
5,940
Labor rate variance
Labor efficiency variance

490 F

Efficiency variance

3
4,500

456

228 F

Actual hours worked

Actual labor cost

Rate variance

Case D

2,437.5
0F

Problem 7: Relationships - Labor Variances

Case A Case B
16,400
Units produced
.00

Standard hours
Standard hours per unit
Standard rate per hour

Case C

8,200.
00

Case C
5,850.0
0
6,000.0
0

Case D
2,000.0
0
6,200.0
0

0.50
4.00
23,110
.00

71,100.
00
400 F

1,200
F

Problem 8: Materials Mix & Yield Variance

Mix Variance
3,939 U
Yield Variance
281 U

Problem 9: Labor Rate, Mix & Yield Variances

Rate Variance
3,500 U
Mix Variance
5,000 U
Yield Variance
0
Problem 10: Material & Labor Mix & Yield
Variances
Materia
ls
Labor
Mix Variance
533 U 1,019 U
Yield Variance
1,267 U
981 U
Problem 11: Flexible Budget
@ 70%
@ 80%
@ 90%
@
100%

1,455,
000
1,605,
000
1,755,
000
1,905,
000

Problem 12: Variable Overhead Variances

19,000
Spending variance
F
11,000
Efficiency variance
F
Problem 13: Standard Cost Relationships
1a
12
1b
48
1c
18
2.
420,000
3.
30,000
4.
25,000
5.
80,000
6.
297,000 792000
Problem 14: Labor & Variable Overhead Variances - Missing
Elements
a.
8,734
b.
17,468
c.
18,200

d.
e.

4,392 U
96,880

Problem 15: Two-way, Three-way, Four-way Overhead

Variances
2-way
2,720 F
1,600 U
3-way

2,420 F
300 F
1,600 U

4-way
Variable
Fixed

370 F
300 F
2,050 F
1,600 U

Problem 16: Three-Way Variance - Missing Data

A.
28,000
B.
25,500
Problem 17: Four-Way Variance
a.
20,000
b.
23,000
c.
500 U
d.
1,000 F
e.
1,000 U
f.
4,500 F
Problem 18: Four-Way Variance Fixed Overhead Budget
Variance
Actual
325,88
OH
0
324,00
Flexible Budget
0
326,26
Applied
8
Problem 19: Four-Way Variance - Missing
Elements
a.
1,600
b.
500 U
c.
596 U
d.
96 F

e.
f.

10,800
10,300

Problem 20: Materials, Labor & Variance Overhead

Variances
DM
320 F 1,200 U
DL
225 U 1800 F
OHVariable
300 U
900 F
Problem 21: Materials, Labor, Variable Overhead Variances - Relationships
among Costs
$2 per pound; $8 per unit
1a
of product
1b
0.5 hour
1c
$4 per unit
4.
62,400
5.
4,100 hours
7.
1,600 F
9.
1,200 U
11.
800 U
12.
31,300
Problem 22:
A.
B.
C.
D.
E.
F.

192,000.00
16,000 U
9,000 U
16,000 U
231,000.00
2,000.00