Question

Q Search Sheet Chapter_7_Inc-Class Group Work 2 (1) View Formulas Data Review + Share Home 051 Insert x v Page Layout fx 2 3 The actual information pertains to the month of June. As part of the budgeting process, Colonial Fencing Company developed the following static budget for September. Colonial is in the process of preparing the flexible budget and understanding the results. Actual Results 19.000 Flexible Budget Static Budget 20.500 Sales volume (in units) $ 615,000 10 Sales revenues 11 Variable costs 510,000 256.000 300.000 13 Contribution margin $ 254,000 315,000 -228.000 15 Fixed costs 16 Operating profit 235.000 19.000 87.000 19 The flexible budget for sales revenues will be? Nancy's Draperies manufactures curtains. A certain window curtain requires the following: 25 Direct materials standard 26 Direct manufacturing labor standard 10 square yards at $5 per yard 5 hours at $10 28 During the second quarter, the company made 1,500 curtains and used 14,000 square yards of fabric costing $72,000. Direct labor totaled 7,600 hours for $83,600. 30 Required: Compute the direct materials price and efficiency variances for the quarter. Compute the direct manufacturing labor price and efficiency variances for the quarter. Direct materials variances: Actual unit cost Price variance Efficiency variance b. Direct manufacturing labor variances: Actual labor rate Price variance Group 2 + Ready 0 - 0 + 90%

Answer 1

Solution:

1.) The flexible budget for sales revenue will be $570,000.

First we calculate selling price per unit of actual results :

Selling price per unit = Sales revenue / Sales volume (in units)

= $510,000 / 19000 units

= $26.84 per unit

Now, we calculate selling price per unit of static budget:

Selling price per unit = Sales revenue / Sales volume (in units)

= $615,000/ 20,500 units

= $30 per unit

The flexible budget for the sales revenue will be:

= Units of actual results × Selling price of static budget

=19000 × $30

=$570,000

2.)

a.) Direct materials variance:

Actual unit cost (fabric costing/ used square yard)	$5.14 per square yard ($72,000/ 14,000 square yards)
Price variance ( Actual quantity × (Standard price - Actual price))	$1,960 U (14,000 × ($5.00 - $5.14)
Efficiency variance (Standard price × (Actual quantity - standard quantity)	$5.00 × [(14000 - (1500 × 10) ] =$5,000 F

b.) Direct manufacturing labor variance:

Actual labor rate ( actual Direct labor cost / actual direct labor hrs.)	$11.00 per hour ($83,600/7,600)
Price variance (Actual hours × (actual direct labor cost - standard direct labor cost))	$7,600 U (7600 ×($11.00 - $10.00))
Efficiency variance (Standard direct labor cost × (Actual direct labor hours - standard labor hours))	$10.00 × (7600 - 7500) =$1,000 U

* 7500 hrs. =1500 ×5 hrs.

* Sorry for excel. If you any query regarding this question, you can ask me.