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Completion of the project requires the student to construct a spreadsheet that facilitates entering a company’s forecast information and the actual results of operations. The Master (Static) Budget, the Flexible Budget, and the Actual Operating Statement in addition to the amount of variances will be calculated automatically and the appropriate reconciliation completed.
The completed project will contain a sheet for input of data and a sheet for output. A template containing labels is provided. The student is responsible for entering the one formula on the input sheet and the formulas on the second sheet. The second sheet contains no input cells. All cells are labels or formulas.
Here are some specifics about this company’s operations and cost accounting practices:
· There are no opening or closing inventories.
· Overhead allocation is based on labor hours.
· The company separates variable overhead allocation from fixed overhead allocation.
· The company posts standard costs toward its operating statement for direct costs (DM, DL, VFOH, FFOH) and actual amounts for revenue and indirect costs (Selling and Administration).
· The company writes off variances directly to cost of goods sold.
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