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Solution 11-37

# Solution 11-37 - DATA INPUT Lawnmate Company Operating...

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DATA INPUT Lawnmate Company Operating Results For the Month of May Master Budget Actual Variance Units sold 5,000 4,800 200 U Revenue \$1,200,000 \$1,152,000 \$48,000 U Variable cost 760,000 780,000 (20,000) U Contribution margin \$440,000 \$372,000 \$68,000 U Fixed overhead 180,000 180,000 - Fixed general and adminstrative cost 120,000 115,000 5,000 F Operating income \$140,000 \$77,000 \$63,000 U Unit costs: Direct material \$60 Direct labor \$44 variable overhead \$36 variable selling costs \$12 Total variable costs: \$780,000 Direct material \$320,000 67 Direct labor \$192,000 40 Variable overhead \$176,000 37 Variable selling expenes \$92,000 19 SOLUTION 1) Flexible budget for the month of May, based on 4,800 units, showing separate variable cost budget is as follows: Lawnmate Company Flexibile Budget For the Month of May Revenue 4,800 x \$1,200,000 / 5,000 = \$1,152,000 Deduct: Variable costs: Direct material 4,800 x \$60 = \$288,000 Direct labor 4,800 x \$44 = 211,200 Variable overhead 4,800 x \$36 = 172,800 Variable selling 4,800 x \$12 = 57,600 Total variable costs 729,600 Contribution margin \$422,400 Deduct: Fixed costs: Fixed overhead 180,000 Fixed general and administrative 120,000 300,000 Operating income \$122,400 2) Flexible-budget variances are as follows: Lawnmate Company

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