chapter21probsetc

# chapter21probsetc - PROBLEM SET C PROBLEM 21-1C Gleason...

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PROBLEM SET C PROBLEM 21-1C Gleason Corporation manufactures cell phones. The phones are sold by Gleason for \$59.00 each. The various variable and fixed costs incurred by the company for a one month time period are shown in the table below. The fixed costs do not vary from month to month as long as the monthly units produced does not exceed 15,000 units. Cost element Variable Cost per Unit Direct materials \$ 7.50 Direct labor 9.00 Variable factory overhead 1.50 Utilities .45 Sales commissions 5.90 Shipping expenses 1.20 Office supplies .70 Fixed Cost per Month Depreciation: factory machinery \$ 7,000 Supervisory salaries 12,000 Insurance expense 1,500 Depreciation: office equipment 2,000 Administrative salaries 4,000 Sales salaries (does not include commissions) 3,500 Required: 1. Prepare a flexible budget for a one-month time period for the Gleason Corporation assuming three different levels of sales: (a) 11,000 units, (b) 12,500 units, and, (c) 13,400 units. You may assume that the company produces exactly the same number of units that it sells per month. 1

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PROBLEM 21-2C Newark Company manufactures high-priced cutting boards for use in the home kitchen. The boards are made out of teak wood. The standard amount of wood for each board is 3 feet and the standard cost per board foot of lumber are \$1.25 per foot. Each cutting board is expected to use one-half hour of direct labor and the standard cost per direct-labor hour is \$13.00 per hour. At the beginning of 2006, the company had 6,000 square feet of lumber on hand. At the beginning of January 2006, the company buys 40,000 board feet of lumber for cash at a total purchase price of \$54,400. During January, the company needs to requisition 40,800 square feet of lumber to start and complete 12,000 cutting boards. The company uses 6,300 direct labor hours to manufacture the 12,000 boards at a total direct labor cost of \$86,436. Required: 1. Using the formula approach, calculate the: (a) direct materials price variance, (b) the direct materials usage variance, (c) the direct labor price variance, and (d) the direct labor usage variance. 2. Record the following General Journal entries. Dates and explanations are not needed. (a) the entry to record the purchase of materials and the direct materials price variance. (b) the entry to enter into work-in-process all of the direct materials used for the month and to
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## This note was uploaded on 09/23/2010 for the course FIN 310 taught by Professor Smith during the Fall '10 term at Arizona Western College.

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chapter21probsetc - PROBLEM SET C PROBLEM 21-1C Gleason...

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