Question

Assume Piedmont Computer Company has created a standard cost card for the PCC model tablet computer, with overhead allocated based on direct labor​ hours in the chart below.

During the month of​ September, Piedmont Computer Company incurred the following costs while manufacturing 1,100 PCC model​ tablets in the chart below.

Please prepare a flexible budget for September for 900, 1,000, and 1,100 PCC model tablets. The tablet has a standard sales price of $ 675. Please list variable costs separately.

Also, using 1,000 PCC model tablets for the static​ budget, prepare a flexible budget performance report for September. Total sales revenue for the month was $ 767,800. The company sold 1,100 tablets.

What insights can the management of PCC draw from the performance report?

Thanks in advance ?

. X Standard Costs 1 $300 per tablet Direct materials 3 hours per tablet at $26 per hour Direct labor 3 hours per tablet at $5 per hour Variable overhead $54,000 per month Fixed overhead

Answer 1

Actual result 1,100 767,800 Varaince Variance (actual -flexible) $ 25,300 Favorable Piedmont computer company Flexible budget for the month ended september 30 Units 900 1000 1100 sales revenue $ 675$ 607,500 $ 675,000 $ 742,500 Variable cost Direct material $ 300 $ 270,000 $ 300,000 $ 330,000 Direct Labor (3 x 68) $ 78 $ 70,200 $ 78,000 $ 85,800 Variable overhead ( 3 x 5) 15 $ 13,500 $ 15,000 $ 16,500 B Total variable cost $ 353,700 $ 393,000 $ 432,300 C=A-B Contribution margin $ 253,800 $ 282,000 $ 310,200 D Fixed cost $ 54,000 $ 54,000 $ 54,000 E =C-D Operating income $ 199,800 $ 228,000 $ 256,200 341,000 $ 11,000 Unfavorable 88,000 $ 2,200 Unfavorable 17,600 $ 1,100 Unfavorable 446,600 $ 14,300 Unfavorable 321,200 $ 11,000 Favorable 56,320 $ 2,320 Unfavorable 264,880 $ 8,680 Favorable