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09 Laboratory Exercise 1

This document provides instructions for a laboratory exercise to prepare a flexible budget in Microsoft Excel. The objectives are to prepare a flexible budget. The basic principles of a flexible budget are explained - it is a recomputed budget based on actual activity that considers how changes in activity affect costs. Students are given information on the budgeted and actual production units and costs for Drexler Company. They are to use this information to prepare a flexible budget report in Excel showing the static budget and flexible budget, and indicating if any variances are favorable or unfavorable. The document provides detailed formatting instructions and grading criteria for the output.

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Shai Gomez
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650 views

09 Laboratory Exercise 1

This document provides instructions for a laboratory exercise to prepare a flexible budget in Microsoft Excel. The objectives are to prepare a flexible budget. The basic principles of a flexible budget are explained - it is a recomputed budget based on actual activity that considers how changes in activity affect costs. Students are given information on the budgeted and actual production units and costs for Drexler Company. They are to use this information to prepare a flexible budget report in Excel showing the static budget and flexible budget, and indicating if any variances are favorable or unfavorable. The document provides detailed formatting instructions and grading criteria for the output.

Uploaded by

Shai Gomez
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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BM1915

Laboratory Exercise
Applying Responsibility Accounting in MS
Excel

Objectives:

At the end of the exercise, the students should be able to:

 Prepare a flexible budget.

Equipment:

 Computer
 MS Excel

Basic Principles:
A flexible budget is a recomputed budget based on actual activity results. Flexible budgets consider how
changes in activity affect costs. A flexible budget is an estimate of what revenues and costs should have been,
given the actual level of activity for the period. When a flexible budget is used in performance evaluation, actual
costs are compared to what the costs should have been for the actual level of activity during the period rather
than to the static planning budget.

Problem:
Drexler Company expects to produce 5,000 units of product X for July 201A. Budgeted variable manufacturing
costs per unit are:

Direct materials P6
Direct labor 15
Variable manufacturing overhead 24

Monthly budgeted fixed manufacturing overhead costs are P10,000 for depreciation, and P20,000 for the
supervisor’s salary.

In the current month, Lawler produced 5,200 units and incurred the following costs:

Direct materials P34,000


Direct labor 74,200
Variable manufacturing overhead 120,500
Depreciation 10,000
Supervisor’s salary 20,000

Using the information above, prepare a flexible budget report. Indicate whether the variance is favorable or
unfavorable.

09 Laboratory Exercise 1 *Property of STI


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BM1915

Procedure:

1. Open MS Excel and start a new worksheet.


2. Enter the information following the correct formats.

For the given values, answer and problem solving, use the following format:

Heading, Column Titles Font style: Arial, bold


Font size: 10 pts.
Alignment: Center
Row height: 15
Merged cell
Account Titles Font style: Arial
Font size: 10 pts.
Alignment: Align Left
Row Height: 15
Column Width: 30
Amounts Font style: Arial
Font size: 10 pts.
Alignment: Align Right
Row Height: 15
Column Width: 12

3. Using the concepts in responsibility accounting, prepare the flexible budget as required in the problem.
4. Enter the following information in Figure 1 for the given values.

Figure 1. Given values

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BM1915

5. Enter the following information in Figures 2-3 for the problem solving.

Figure 2. Static budget

Figure 3. Flexible budget

6. Save the Excel file as “Surname_ProjMgtExer9” and place it on the network drive.

Rubric for grading the output:


CRITERIA PERFORMANCE INDICATORS POINTS
Neatness and The spreadsheet has exceptional formatting, and the information is well-
20
Organization organized.
The spreadsheet formulas are well-developed and will correctly
Formulas 30
determine the needed information.
Titles, Labels, and
The spreadsheet contains clearly labeled rows and columns. 10
Headings
The spreadsheet meets all the necessary requirements to interpret the
Content 40
result of the operation.
TOTAL 100

09 Laboratory Exercise 1 *Property of STI


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