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# Demo8 - Demo Problem 8-1 Character of Variances Item Budget...

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Item Budget Actual Variance F or UF Selling and Admin. Exp. \$ 29,000 \$ 27,000 Sales Revenue \$310,000 \$325,000 Materials Price \$2.00 per lb. \$2.10 per lb. Cost of Goods Sold \$125,000 \$100,000 Materials Purchases \$250,000 \$265,000 Materials Usage 6,000 lbs. 5,800 lbs. Sales Price \$550 each \$500 each Labor Rate \$8.10 per hr. \$7.95 per hr. Production Volume 950 units 900 units Labor Usage \$ 96,000 \$ 97,000 Research and Dev. Exp. \$ 22,000 \$ 25,000 Demo Problem 8-1 / Character of Variances
Demo Problem 8-1 / Character of Variances Item Budget Actual Variance F or UF Selling and Admin. Exp. \$ 29,000 > \$ 27,000 \$ 2,000 F Sales Revenue \$310,000 < \$325,000 \$15,000 F Materials Price \$2.00 per lb. < \$2.10 per lb. \$.10 per lb. UF Cost of Goods Sold \$125,000 > \$100,000 \$25,000 F Materials Purchases \$250,000 < \$265,000 \$15,000 UF Materials Usage 6,000 lbs. > 5,800 lbs. 200 lbs. F Sales Price \$550 each > \$500 each \$50 each UF Labor Rate \$8.10 per hr. > \$7.95 per hr. \$.15 per hr. F Production Volume 950 units > 900 units 50 units UF Labor Usage \$ 96,000 < \$ 97,000 \$ 1,000 UF Research and Dev. Exp. \$ 22,000 < \$ 25,000 \$ 3,000 UF

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Price and Variable Costs Per Unit: Standard Actual Sales Price \$62.00 \$60.00 Direct Materials Cost 16.00 16.34 Direct Labor Cost 12.00 10.92 Overhead Cost 14.00 14.20 General, Selling, and Administrative (G,S,&A) Cost 8.00 7.00 Expected Fixed Costs: Manufacturing \$120,400 \$114,000 General, Selling, and Administrative 67,000 69,000 The following data apply to chairs made by the Western Chair Company: Western planned to make and sell 43,000 chairs. It actually produced and sold 44,000 chairs. Demo Problem 8-2 Sales Volume and Flexible Budget Variances Static Budget Flexible Budget Volume Variances F or UF Number of Units Sales Revenue Variable Costs Direct Material Direct Labor Overhead G,S,&A Contribution Margin Fixed Costs Manufacturing G,S,&A Net Income