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AM S1 Reguler – [V] Flexibel Budget, Mar 19, 2015

Dosen : Thomas Honggo Setjokusumo, Asdos : Husnan Rianto

Problem 1 – Static Budget Variance
Banca Books, Inc., produces luxury checkbooks with three checks and stubs per
page. Each checkbook is designed for an individual customer and is ordered
through the customer’s bank. The company’s operating budget for September
2014 included these data:
Selling price per
Variable cost per
Fixed costs for the


produced and sold




Average selling price per book



Variable cost per book



Fixed costs for the month


The executive vice president of the company observed that the operating income
for September was much lower than anticipated, despite a higher-than-budgeted
selling price and a lower-than-budgeted variable cost per unit. As the company’s
management accountant, you have been asked to provide explanations for the
disappointing September results.
Banca Books, Inc., develops its flexible budget on the basis of budgeted peroutput-unit revenue and per-output-unit variable costs without detailed analysis
of budgeted inputs.
Bank Management develops its flexible budget on the basis of budgeted peroutput-unit revenue and per-output-unit variable costs without detailed analysis
of budgeted inputs.
1. Prepare a static-budget-based variance analysis of the September
2. Prepare a flexible-budget-based variance analysis of the September
3. Why might Bank Management find the flexible-budget-based variance
analysis more informative than the static-budget-based variance analysis?
Explain your answer.

Problem 2- Flexible Budget Breakdowns
PT Alam Sejahtera is a manufacturing company in the snack industry. Earlier in
2013, the management decided to introduce a new product called Kacang
Premium, an assortment of nuts in a pack, and it will be manufactured in the
Karawang Barat Plant. As its name suggests, Kacang Premium uses only the best
ingredients and is seasoned with a secret ingredient. Kacang Premium will be
sold in packs of 150 grams, and made in batches. The Product Development
Manager has proposed that a batch of Kacang Premium (consisting of 200 packs)
consists of ingredients as below:

000 64% 4. and it has been distributed in several upscale supermarkets in Jabodetabek. The quantity of inputs and price of inputs are reported as below. 2015 Dosen : Thomas Honggo Setjokusumo. Calculate the total direct materials efficiency variance.968 boxes Rp 539.200 boxes Rp 1. Asdos : Husnan Rianto Ingredient Quantity per Batch Price of input Pistachio 100 boxes Rp 50.072 boxes Rp 192. Ingredients Actual Quantity Actual Cost Actual Mix Pistachio 16.300.000 39% Secret Seasoning 3.000 per box Walnut 80 boxes Rp 35.000 22.400.000 32. Compute the market-share and market-size variances for May 2014 c.136.000 Budget 220000 $ 3. Comment on possible reasons for the variance you computed in requirement b . Mar 19.000 per box Secret Seasoning 20 boxes Rp 70. the Production Manager of PT Alam Sejahtera reported that Karawang Barat Plant has manufactured 150 batches of Kacang Premium. What are these variances telling you about the 30.000 6% Total Actual 51. Compute the sales volume variance for May 2014 b. Calculate the total direct materials mix and yield variances.5% Macadamia 19.000 packs? 2.350.000 per box Macadamia 120 boxes Rp 25.960.000 100% 1.000.000 packs produced this quarter? Are the variances large enough to investigate? Problem 3 – Market Share and Size Variance AdiWear Company produces dry-fit t-shirt for joggers.048.000 a.412.5% Walnut 11.140 68% 4.520 boxes Rp 402. Information pertaining to AdiWear’s operations for May 2014 follows: Units sold Sales revenue Variable cost ratio Market size in units Actual 230550 $ 3. 3.640 boxes Rp 856. What is the budgeted cost of direct materials for the 30.000 per box During the second quarter of 2013.144.990.AM S1 Reguler – [V] Flexibel Budget.

Following is osme budget date for the Italiano Bread Company DM labor use Variable Manufacturing Overhead $ 0.400 1. Is fixed overhead underallocated or overallocated? . Mar 19. Asdos : Husnan Rianto Problem 4 – Variable and Fixed Overhead Variance The Italiano Beread Company bakes baguettes for fistribution to upscale grocery stores.200.000 50.02 hours per baguette 10 per DML-hour The Italiano Bread Company provides the following additional data for the year ended December 31. Prepare a variance analysis of fixed manufacturing overhead cost 2.000 1. For 2014.800. Prepare a variances analysis of variable manufacturing overhead The Italiano Bread Company also allocates fixed manufacturing overhead to products on the basis of standard DML-hours.000 2. The company has two direct-cost categories: DM and DML.AM S1 Reguler – [V] Flexibel Budget. Actual fixed manufacturing overhead incurred during the year was $272. 2014: Planned (budgeted) output Actual Production DML Actual Variable manufacturing Overhead $ 3.400 680. fixed manufacturing overhead was budgeted at $4. 2015 Dosen : Thomas Honggo Setjokusumo. Variable manufacturing overhead is allocated to products on the basis of standard DMLhours.00 per DML-hours. What is the denominator level used for allocating variable manufacturing overhead? 2.

The president is pleased with the following performance report: Actual Costs Static Budget $ Direct Materials 364.000 $ 110. Asdos : Husnan Rianto Homework Boehringer Ingelheim budgeted prices for direct materials.AM S1 Reguler – [V] Flexibel Budget. and direct marketing (distribution) labor per bottle are $40.000 $ 120.000 F Actual output was 8.000 $ 800.000 Variance 722.800 bottle.000 $ Direct Manufacturing Labor Direct Marketing (distribution) labor 78. direct manufacturing labor. Is the president’s pleasure justified? Prepare a revised performance report that uses a flexible budget and a static budget.000 F $ F $ 10. 2015 Dosen : Thomas Honggo Setjokusumo.000 $ 36. Assume all three direct-cost items shown are variable costs. respectively. Mar 19. $8.000 $ 400. and $ 12. .