Question

Paynesville Corporation manufactures and sells a preservative used in food and drug manufacturing. The company carries no inventories. The master budget calls for the company to manufacture and sell 100,000 liters at a budgeted price of $75 per liter this vear. The standard direct cost sheet for one liter of the preservative follows. Direct materials Direct labor (2 pounds $4) (0.5 hours $24) $ 8 12 Variable overhead is applied based on direct labor hours. The variable overhead rate is $20 per direct-labor hour. The fixed overhead rate (at the master budget level of activity) is $10 per unit. All non-manufacturing costs are fixed and are budgeted at $1.2 million for the Coming year At the end of the year, the costs analyst reported that the sales activity variance for the year was $270.000 unfavorable The following is the actual income statement (in thousands of dollars) for the year. Sales revenue $7,238 Less variable costs 748 Direct materials 1,010 930 Direct labor Variable overhead Total variable costs Contribution margin $2,688 $4,5s0 Less fixed costs Fixed manufacturing overhead Non-manufacturing costs Total fixed costs 1,050 1,230 $2,280 Operating profit $2,270

Answer 1

Answer is given below

Paynesville Corporation Profit Variance Analysis Non- Manufacturing Actual Variances Manufacturing Variances 96,400 $7,238 Sales price Variance Flexible Budget Sales Activity Variance Master Budget Units Sales Revenue 96,400 $7,230 $2700 100,000 $7,500 $800 $748 $1,010 $930 $2,688 $4,550 $23F $147 F $34F $204 F $204 F $771 $1,157 $964 $2,892 $4,338 $29 F $43 F $36F $108 F $1620 $1,200 $1,000 $3,000 $4,500 $8 F Materials Direct Labor Variable Overhead Total Variable Costs Contribution Margin LESS: Fixed Cost Manufacturing Non-manufacturing Total Fixed Costs Profit $50 U $0 $0 $1,050 $1,230 $2,280 $2,270 $1,000 $1,200 $2,200 $2,138 $30 UN $30 UI $300 $1,000 $1,200 $2,200 $2,300 $50 UI $154F Sod $8FO $162 U

Answer 2

Somethings wrong in there