Acct306 Homework Ch07 - CHAPTER 7 FLEXIBLE BUDGETS...

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7-1 CHAPTER 7 FLEXIBLE BUDGETS, DIRECT-COST VARIANCES, AND MANAGEMENT CONTROL 7-32 Comprehensive variance analysis, responsibility issues. 1a. Actual selling price = $82.00 Budgeted selling price = $80.00 Actual sales volume = 7,275 units Selling price variance = (Actual sales price Budgeted sales price) × Actual sales volume = ($82 $80) × 7,275 = $14,550 Favorable 1b. Development of Flexible Budget Budgeted Unit Amounts Actual Volume Flexible Budget Amount Revenues $80.00 7,275 $582,000 Variable costs DM Frames $2.20/oz. × 3.00 oz. 6.60 a 7,275 48,015 DM Lenses $3.10/oz. × 6.00 oz. 18.60 b 7,275 135,315 Direct manuf. labor $15.00/hr. × 1.20 hrs. 18.00 c 7,275 130,950 Total variable manufacturing costs 314,280 Fixed manufacturing costs 112,500 Total manufacturing costs 426,780 Gross margin $155,220 a $49,500 ÷ 7,500 units ; b $139,500 ÷ 7,500 units; c $135,000 ÷ 7,500 units Actual Results (1) Flexible- Budget Variances (2)=(1)-(3) Flexible Budget (3) Sales - Volume Variance (4)=(3)-(5) Static Budget (5) Units sold 7,275 7,275 7,500 Revenues $596,550 $14,550F $582,000 $18,000 U $600,000 Variable costs DM Frames 55,872 7,857U 48,015 1,485 F 49,500 DM Lenses 150,738 15,423U 135,315 4,185 F 139,500 Direct manuf. labor 145,355 14,405U 130,950 4,050 F 135,000 Total variable costs 351,965 37,685U 314,280 9,720 F 324,000 Fixed manuf. costs 108,398 4,102F 112,500 0 112,500 Total costs 460,363 33,583U 426,780 9,720 F 436,500 Gross margin $136,187 $19,033U $155,220 $ 8,280 U $163,500 Level 2 $19,033 U $ 8,280 U Flexible-budget variance Sales-volume variance
7-2 Level 1 $27,313 U Static-budget variance