Master (Static) Budget
Units |
1,000 |
Sales |
$800,000 |
Variable costs |
450,000 |
Contribution margin |
$350,000 |
Fixed costs |
150,000 |
Operating income |
$200,000 |
a.
Flexible Budget Performance Report For The Month Of June |
|||||||
Actual results | Revenue and spending variance | Flexible budget | Activity variance | Master budget | |||
Units | 920 | 920 | 1,000 | ||||
Sales | $768,200 | $32,200 | F | $736,000 (920*$800,000/1,000) | $64,000 | U | $800,000 |
Variable cost | 460,000 | 46,000 | U | 414,000 (920*$450,000/1,000) | 36,000 | F | 450,000 |
Contribution margin | 308,200 | 13,800 | U | 322,000 | 28,000 | F | 350,000 |
Fixed costs | 180,000 | 30,000 | U | 150,000 | 0 | 150,000 | |
Operating income | $128,200 | $43,800 | U | $172,000 | $28,000 | U | $200,000 |
b.
i. Purchase price variance = Actual quantity*Standard price - Actual quantity*Actual price
Actual quantity purchased = 3450+30-50 = 3430 units
Purchase price variance = 3,430*$25 - 3,430*$28.50
Purchase price variance = $85,750 - 97,755 = $12,005 Unfavorable
Material usage variance = Standard quantity*Standard price - Actual quantity*Standard price
Material usage variance = 920*4*$25 - 3,450*$25
Material usage variance = $92,000 - 86,250 = $5,750 Favorable
Direct labor rate variance = Actual hours*Standard rate - Actual hours*Actual rate
Direct labor rate variance = 4,340*$40 - 4,340*$41.50
Direct labor rate variance = $173,600 - 180,110 = $6,510 Unfavorable
Direct labor efficiency variance = Standard hours*Standard rate - Actual hours*Standard rate
Direct labor efficiency variance = 920*5*$40 - 4,340*$40
Direct labor efficiency variance = $184,000 - 173,600 = $10,400 Favorable
ii. No, management did not make good decision as both the purchase price variance for aluminium and labor rate variance are unfavorable.
) The Master (Static) budget for Jack Daniels Inc. is presented below. For June, Jack Daniels...
Standard Cost Sheet, Product XV-1 EXHIBIT 14.5 SCHMIDT MACHINERY COMPANY Standard Cost Sheet Product: XV-1 Descriptions Quantity Cost Rate Subtotal Total Direct materials: Aluminum $100 4 pounds $25/pound 1 pound PVC 40/pound 40 Direct labor 5 hours 40/hour 200 Variable factory overhead 5 hours 12/hour 60 Total variable manufacturing cost $400 Fixed factory overhead 24/hour 5 hours 120 120 Standard manufacturing cost per unit $520 50 Standard variable selling and administrative cost per unit *Budgeted fixed factory overhead cost $120,000....
Direct Material Variances Goldman, Inc. is a manufacturer of lead crystal glasses. The standard direct materials quantity is 0.7 pounds per glass at the cost of $0.35 per pound. The actual result for one month’s production of 6,950 glasses was 1.3 pounds per glass, at the cost of $0.45 per pound. Calculate the direct materials cost variance and the direct materials efficiency variance. Direct Labour Variances Goldman, Inc. manufactures lead crystal glasses. The standard direct labor time is 0.5 hours...
ACC 300 CHAPTER 6 HW Jensen Manufacturing has the following information relating to their master budget for 2020: Units Sold Selling Price Pounds of Direct Materials Per Unit Manufactured DL Hours Per Unit Manufactured OH Rate Per DL Hour Current Inventory of Finished Product Target Inventory of Finished Product Current Inventory of Direct Materials Target Inventory of Direct Materials Cost per Pound of Direct Material Cost per Direct Labor Hour 2,500 units $100 per unit 3 pounds 2 hours $15...
Jake’s Cheese Company produces gourmet cheese for resale at local grocery stores. The master budget indicates that the company expects to use 4.0 pounds of direct materials for each unit produced at a cost of $7.00 per pound (one unit = one batch of cheese). Each unit produced will require 0.50 direct labor hours at a cost of $12.00 per hour. Variable manufacturing overhead is applied based on direct labor hours at a rate of $6.00 per hour. Last year's...
Jake’s Cheese Company produces gourmet cheese for resale at local grocery stores. The master budget indicates that the company expects to use 4.0 pounds of direct materials for each unit produced at a cost of $7.00 per pound (one unit = one batch of cheese). Each unit produced will require 0.50 direct labor hours at a cost of $12.00 per hour. Variable manufacturing overhead is applied based on direct labor hours at a rate of $6.00 per hour. Last year's...
During June, Danby Company’s material purchases amounted to 8,000 pounds at a price of $6.20 per pound. Actual costs incurred in the production of 2,500 units were as follows: Direct labor: $ 121,506 ($15.40 per hour) Direct material: $ 32,798 ($6.20 per pound) The standards for one unit of Danby Company’s product are as follows: Direct Labor: Direct Material: Quantity, 3 hours per unit Quantity, 2 pounds per unit Rate, $15.00 per hour Price, $5.90 per pound Required: Fill...
Heavy Products, Inc. developed standard costs for direct material and direct labor. In 2017, AII estimated the following standard costs for one of their major products, the 10−gallon plastic container.Budgeted quantity Budgeted priceDirect materials0.7 pounds$50 per poundDirect labor0.05 hours$25 per hourDuring June, Heavy Products produced and sold 23,000 containers using 20,000 pounds of direct materials at an average cost per pound of $53 and 16,100 direct manufacturing labor-hours at an average wage of $25.50 per hour.The direct material price variance...
Puvo, Inc., manufactures a single product in which variable manufacturing overhead is assigned on the basis of sta The company uses a standard cost system and has established the following standards for one unit of product Standard Price or Rate Direct materials Direct labor Variable manufacturing overhead Standard Quantity 6.90 pounds 8.60 hours 8.60 hours 5 0.70 per pound $44.50 per hour 9.60 per hour Standard Cost $ 4.83 26.7e $ 5.76 During March, the following activity was recorded by...
Animent Industries, Inc. (AII), developed standard costs for direct material and direct labor. In 2015, AII estimated the following standard costs for one of their major products, the 10-gallon plastic container. Budgeted quantity Budgeted price Direct materials 0.70 pounds $80 per pound Direct labor 0.05 hours $20 per hour During June, AII produced and sold 16,000 containers using 19,000 pounds of direct materials at an average cost per pound of $84 and 11,200 direct manufacturing labor-hours at an average wage...
the labor rate variance for june is
Kartman Corporation makes a produ in Corporation makes a product with the following standards Direct materials Direct labor Variable overhead Standard Quantity or Hours 6.5 pounds 0.6 hours 0.6 hours Standard Cost Standard Price or Rate Per Unit $ 7.00 per pound $ 45.50 $ 24.00 per hour $ 1440 $ 4.00 per hour $ 2.40 In June the company's budgeted production was 3.400 units but the actual production was 30 units. The...