Fundamentals Of Cost Accounting (6th Edition)
6th Edition
ISBN: 9781259969478
Author: WILLIAM LANEN, Shannon Anderson, Michael Maher
Publisher: McGraw Hill Education
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Chapter 17, Problem 46P
Nonmanufacturing Cost Variances
FSBCU is a financial institution that originates mortgage loans. The company charges a service fee for processing loan applications. This fee is set twice a year based on the cost of processing a loan application. For the first half of this year, the bank estimated that it would process 360 loans. Correspondence, credit reports, supplies, and other materials that vary with each loan are estimated to cost $45 per loan. The company hires a loan processor at an estimated cost of $90,000 per year and an assistant at an estimated cost of $70,000 per year. The cost to lease office space and pay utilities and other related costs is estimated to be $195,000 per year.
During the first six months of this year, FSBCU processed 384 loans. Cost of materials, credit reports, and other items related to loan processing were 5 percent lower than expected for the volume of loans processed.
The loan processor and her assistant cost $84,000 for the six months. Leasing and related office costs were $98,500 for the six months.
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Berger Mortgage Co. provides the following data on its loan application processing activities for the month of February:
Move time 18 hours
Wait time 63 hours
Process time 230 hours
Storage time 15 hours
Inspection time 22 hours
Compute the cycle efficiency for February:
IN THE COMPUTATION FOR THROUGHPUT TIME, WHY ISN'T WAIT TIME INCLUDED IN IT?
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MI
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Banc Corp. Trust is considering either a bankwide overhead rate or department overhead rates to allocate $567,000 of indirect costs. The
bankwide rate could be based on either direct labor hours (DLH) or the number of loans processed. The departmental rates would be based
on direct labor hours for Consumer Loans and a dual rate based on direct labor hours and the number of loans processed for Commercial
Loans. The following information was gathered for the upcoming period:
Department
DLH
Loans Processed
Direct Costs
Consumer
000'
000
18,000
008
Commercial
000
What is the overhead rate if Banc Corp. Trust allocates the indirect costs using direct labor hours?
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Resource Supply and Usage, Special Order, Relevancy
Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of $22,900 and is capable of processing as many as 6,950 purchase orders per year. Each clerk uses a PC and laser printer in processing orders. Time available on each PC system is sufficient to
process 6,950 orders per year. The cost of each PC system is $1,300 per year. In addition to the salaries, Elliott spends $30,024 for forms, postage, and other supplies (assuming 27,800 purchase orders are processed). During the year, 27,200 orders were processed
Required:
1. Which of the resources associated with purchasing can be classified as flexible resources?
Which of the resources associated with purchasing can be classified as committed resources?
2. Compute the total activity availability, and break this into activity usage and unused activity.
Activity availability:
purchase orders
Activity usage:
purchase orders
Unused activity:
purchase…
Chapter 17 Solutions
Fundamentals Of Cost Accounting (6th Edition)
Ch. 17 - What complication arises in variance analysis when...Ch. 17 - Variance analysis can be useful in a manufacturing...Ch. 17 - How would you recommend accounting for variances...Ch. 17 - What does a manager learn by computing an industry...Ch. 17 - Why is there no efficiency variance for revenues?Ch. 17 - For what decisions would a manager want to know...Ch. 17 - If the sales activity or materials efficiency...Ch. 17 - Prob. 8RQCh. 17 - Prob. 9RQCh. 17 - What is the advantage of recognizing materials...
Ch. 17 - How could a professional sports firm use the mix...Ch. 17 - Prob. 12CADQCh. 17 - How could a hospital firm use the mix variance to...Ch. 17 - Prob. 14CADQCh. 17 - There is no reason to investigate favorable...Ch. 17 - Prob. 16CADQCh. 17 - Consider a firm in the sharing economy, such as...Ch. 17 - Prob. 18ECh. 17 - Prob. 19ECh. 17 - Prob. 20ECh. 17 - Variable Cost Variances: Materials Purchased and...Ch. 17 - Prob. 22ECh. 17 - Industry Volume and Market Share Variances DB Ice...Ch. 17 - Olive Tree Products sold 72,000 units during the...Ch. 17 - Prob. 25ECh. 17 - Sales Mix and Quantity Variances A-Zone Media...Ch. 17 - Prob. 27ECh. 17 - Sales Mix and Quantity Variances The restaurant at...Ch. 17 - Sales Mix and Quantity Variances Chow-4-Hounds...Ch. 17 - Materials Mix and Yield Variances Stacy, Inc.,...Ch. 17 - Materials Mix and Yield Variances Johns...Ch. 17 - Labor Mix and Yield Variances Matts Eat N Run has...Ch. 17 - Flexible Budgeting, Service Organization KB is a...Ch. 17 - Prob. 34ECh. 17 - Prob. 35ECh. 17 - Sales Price and Activity Variances EZ-Tax is a tax...Ch. 17 - Write a memo to the senior manager of EZ-Tax...Ch. 17 - Variable Cost Variances The standard direct labor...Ch. 17 - Refer to the information in Exercise...Ch. 17 - Prob. 40PCh. 17 - Variable Cost Variances: Materials Purchased and...Ch. 17 - Industry Volume and Market Share Variances:...Ch. 17 - Industry Volume and Market Share: Missing Data The...Ch. 17 - Sales Mix and Quantity Variances Lake Cellars...Ch. 17 - Analyze Performance for a Restaurant Dougs Diner...Ch. 17 - Nonmanufacturing Cost Variances FSBCU is a...Ch. 17 - Performance Evaluation in Service Industries Bay...Ch. 17 - Refer to the information in Problem...Ch. 17 - Prob. 49PCh. 17 - Refer to the data for the Peninsula Candy Company...Ch. 17 - Materials Mix and Yield Variances Plano Products...Ch. 17 - Pinnuck Products makes a liquid solvent using two...Ch. 17 - Labor Mix and Yield Variances Matthews Bros, is a...Ch. 17 - Refer to the information in Problem...Ch. 17 - Derive Amounts for Profit Variance Analysis...Ch. 17 - Flexible Budget Oak Hill Township operates a motor...
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