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Lovely Flowers Limited bases its selling and administrative expense budget on budgeted unit sales
Lovely Flowers Limited bases its selling and administrative expense budget on budgeted unit sales. The sales budget shows 5,000 units are planned to be sold in October. The variable selling and administrative expense is $19.40 per unit. The budgeted fixed selling and administrative expense is $137,380 per month, which includes depreciation of $8,580 per month. The remainder of the fixed selling and administrative expense represents current cash flows. The cash disbursements for selling and administrative expenses on the October selling and administrative expense budget should be 1) $185,880 2) $234,380 3) $225,800 4) $242,980
Firecracker Company has developed the following direct materials standards for one of its products. Direct materials: 15 pounds * $16 per pound The following activity occurred during the month of October: Materials purchased: 10,000 pounds costing $170,000 7,200 pounds 500 units Materials used: Units produced: The direct materials usage variance is 1) $4,800 F 2) $4,800 U 3) $40,000 F
Expert Solution
Expected sales units = 5,000
Variable selling and administrative expense per unit = $19.40
Budgeted fixed selling and administrative expense = $137,380
Depreciation expense per month = $8,580
| Selling and Administrative Expense Budget | |
| For the Month of October | |
| Variable selling and administrative expense (5,000 x 19.40) | 97,000 |
| Fixed selling and administrative expense | 137,380 |
| Total selling and administrative expenses | $234,380 |
| Depreciation expense | -8,580 |
| Cash disbursement for selling and administrative expense | $225,800 |
The Cash disbursement for selling and administrative expense = $225,800
Third option is correct.
2.
Standard price = $16 per pound
Standard quantity per unit = 15 pound
Actual output = 500 units
Standard quantity for Actual output = Standard quantity per unit x Actual output
= 15 x 500
= 7,500 pounds
Actual quantity used = 7,200 pounds
Direct materials usage variance = Standard price x (Standard quantity- Actual quantity)
= 16 x (7,500-7,200)
= 16 x 300
= $4,800 Favorable
The direct materials usage variance is $4,800 F.
First option is correct.
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