BE9-6

Correct.
For Eckert Inc. variable manufacturing overhead costs are expected to be $20,000 in the first quarter of 2011 with $4,000 increments in each
of the remaining three quarters. Fixed overhead costs are estimated to be $35,000 in each quarter. Prepare the manufacturing overhead
budget by quarters and in total for the year.
ECKERT INC.
Manufacturing Overhead Budget
For the Year Ending December 31, 2011
Quarter
1

Variable costs

Year

20,000

24,000

28,000

32,000

104,000

35,000

35,000

35,000

35,000

140,000

Fixed costs
$

$
55,000

$
59,000

$
63,000

$
67,000

Total manuf. overhead

BE9-8
Correct.
Paige Company has completed all of its operating budgets. The sales budget for the year shows 50,000 units and total sales of $2,000,000.
The total unit cost of making one unit of sales is $22. Selling and administrative expenses are expected to be $300,000. Income taxes are
estimated to be $150,000. Prepare a budgeted income statement for the year ending December 31, 2011. (Enter all amounts as positive
amounts and subtract where necessary.)
PAIGE COMPANY
Budgeted Income Statement
For the Year Ending December 31, 2011

244,000

Sales

$
2,000,000
1,100,000

Cost of goods sold

Gross profit

900,000
300,000

Selling and administrative expenses

Income before income taxes

600,000
150,000

Income tax expenses

$
450,000

Net income

E8-11 (a,b)
Cawley Company's Small Motor Division manufactures a number of small motors used in household and office appliances. The Household
Division of Cawley then assembles and packages such items as blenders and juicers. Both divisions are free to buy and sell any of their
components internally or externally. The following costs relate to small motor LN233 on a per unit basis.
Fixed cost per unit
$5
Variable cost per unit
8
Selling price per unit
30

Correct.
Assuming that the Small Motor Division has excess capacity, compute the minimum acceptable price for the transfer of small motor

LN233 to the Household Division.

$
8

SHOW SOLUTION
SHOW ANSWER

Correct.
Assuming that the Small Motor Division does not have excess capacity, compute the minimum acceptable price for the transfer of the
small motor to the Household Division.
$
30

E11-6
Kendra Company's standard labor cost of producing one unit of Product DD is 4 hours at the rate of $12.00 per hour. During August,
40,800 hours of labor are incurred at a cost of $12.10 per hour to produce 10,000 units of Product DD.

Correct.

Compute the total labor variance.

$
13,680

Unfavorable

SHOW SOLUTION
SHOW ANSWER

Correct.
Compute the labor price and quantity variances.
Labor price variance
Labor quantity variance

$
4,080

Unfavorable

9,600

Unfavorable