Question

please help!!

mondlel uu Exercise 4) Mighty Marketer manufactures boxes for marketing workstations. The firm's standard cost sheet prior to October and actual results for October 2019 are as follows Budget Information Standard Price Actual & Variable Costs Fixed Results per Unit Costs October 2019 Units 9.500 105% Sales x 1.08 50.00 11.09 $ 551,000 Variable costs: 1.05 X Direct materials 5 pounds at $2.40 per pound $ 12.00 V $ 144,000 . Direct labor 2.05 0.5 hour at $14 per hour = 7.00 $ 76,800 Manufacturing overhead 2.00 $ 19,000 Selling and administrative 5.00 $ 55,100 Total variable cost 26.00 $ 294,900 Contribution margin 24.00 $ 256,100 Fixed costs: Manufacturing (factory) overhead $ 50,000 $ 55,000 Selling and administrative $ 20,000 $ 24,000 Total fixed costs $ 70,000 $ 79,000 Operating income $ 177,100 In preparing the master budget for October 2019, the firm recognized that several items on the standard cost sheet would change. For example, the selling price of the product would increase by 8%. Suppliers have notified the firm that starting October 1, materials prices would be 5% higher. The labor contract prescribes a 10% increase, starting October 1, on wages and benefits. Fixed manufacturing costs will increase $5,000 for insurance, property taxes, and salaries. Fixed selling and administrative expenses will increase as follows: $2.000 in managers salaries, and $2,000 for advertising during October 2019. The unit sales for October 2019 are expected to be 10,000 units. Actual results during October 2019 showed that 48,000 lbs. of direct materials were used at a price of $3 per lb, and 4,800 hours of direct labor were incurred a a rate of $16 per hour. Required: 1) In good form, prepare a flexible-budget-based variance cost analysis (level 2). 2) Using your budget from part 1, what is the (give amount and F/U): a) Static-budget variance b) Selling-price variance c) Flexible-budget variance d) Sales-volume variance 3) Compute the MPV, MEV, LRV, and LEV (give amount and F/U).

Answer 1

								Amt in $
Qty			9,500				10,000		14.40
		Static Budget		Actual	Variance	flexible budget		Actual	Variance
Sales Price	a	50.0	4,75,000	5,51,000	76,000	54.0	5,40,000	5,51,000	11,000	Selling price increase by 8%
Variable Cost
Direct Material		12.0	1,14,000	1,44,000	-30,000	12.6	1,26,000	1,44,000	-18,000	Material cost increase by 5%
Direct Labor		7.0	66,500	76,800	-10,300	7.7	77,000	76,800	200	Labor cost increase by 10%
Manufacturing overhead		2.0	19,000	19,000	-	2	20,000	19,000	1,000
Selling and Admn overhead		5.0	47,500	55,100	-7,600	5	50,000	55,100	-5,100
Total Variable cost	b	26.0	2,47,000	2,94,900	-47,900	27	2,73,000	2,94,900	-21,900
Contribution	c=a-b	24.0	2,28,000	2,56,100	28,100	27	2,67,000	2,56,100	-10,900
Fixed Cost
Manufacturing(factory) overhead			50,000	55,000	-5,000		55,000	55,000	-	Fixed Mftg cost increase by $5000
Selling and Admn overhead			20,000	24,000	-4,000		24,000	24,000	-	Fixed Selling & Admn cost increase by $4000
Total Fixed cost	d		70,000	79,000	-9,000		79,000	79,000	-
Operating Income	c-d		1,58,000	1,77,100	19,100		1,88,000	1,77,100	-10,900
Fixed Cost / Unit			7.37	8.32			7.90	7.90
MPV(Actual price paid - Std price)*no of units used				unfav'ble	30,000			unfav'ble	18,000
MEV( Std qty of material consumed - Actual material consumed)*std price /unit				unfav'ble	36			unfav'ble	23
LRV(Actual price paid for th direct labor-Std rate of labor)*no of units used				unfav'ble	10,300			favorable	200
LEV( Std qty labor consumed - Actual qty labor consumed)*std labor rate/hr				unfav'ble	1.12			favorable	0.77