Variance budget variance budget direct mfg labor

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Applied Calculus for the Managerial, Life, and Social Sciences
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Chapter 2 / Exercise 61
Applied Calculus for the Managerial, Life, and Social Sciences
Tan
Expert Verified
VarianceBudgetVarianceBudgetDirect Mfg. Labor18,500 X $51.505,500 X 3.5 X $506,000 X 3.5 X $50$952,750 $962,500 $1,050,000 $9,750 $87,500 FavorableFavorable$97,250 $97,250 FavorableStatic Budget VarianceCost PortionActualFlexible-BudgetFlexibleSales-VolumeStaticCostsVarianceBudgetVarianceBudgetFixed Costs$1,180,000 $1,200,000 $1,200,000 $20,000 $0 Favorable$20,000 $20,000 FavorableStatic Budget Variance2. Calculate the price and efficiency variances for direct materials and direct manufacturing labor.12.866,000 ActualFlexibleSales-VolumeStaticCostsPriceA X SEfficiencyBudgetVarianceBudgetA X AVarianceVarianceSQA X S(Cost Portion)Direct Material70,400 X $9.50 70,400 X $105,500 X 12 X $106,000 X 12 X $10$668,800 $704,000 $660,000 $720,000 $35,200 ($44,000)$60,000 FavorableUnfavorableFavorable($8,800)($8,800)$60,000 UnfavorableFavorableFlexible-BudgetSales-Volume$51,200 $51,200 FavorableStatic Budget Variance3.363619,250 ActualFlexibleSales-VolumeStaticCostsRateA X SEfficiencyBudgetVarianceBudgetA X AVarianceVarianceSQA X S(Cost Portion)Direct Mfg. Labor18,500 X $51.5018,500 X $505,500 X 3.5 X $506,000 X 3.5 X $50$952,750 $925,000 $962,500 $1,050,000 ($27,750)$37,500 $87,500 UnfavorableFavorableFavorable$9,750 $9,750 $87,500 FavorableFavorableFlexible-BudgetSales-Volume$97,250 $97,250 FavorableStatic Budget Variance1. Calculate the sales-volume variance and flexible-budget variance (for operating income ??) for DM, DML, and Fixed Costs.
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Applied Calculus for the Managerial, Life, and Social Sciences
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Chapter 2 / Exercise 61
Applied Calculus for the Managerial, Life, and Social Sciences
Tan
Expert Verified
Exercise 7-39Given:Sonnet, Inc. has the following budgeted standards for the month of March 2011:1,500,000 Budgeted March items:Per UnitAverage selling price per diskette$6.00 $6.00 Total direct material cost per diskette$1.50 ($1.50)Average labor productivity rate (diskettes per hour)300 Direct manufacturing labor cost per hour$12.00 ($0.04)Direct marketing cost per unit$0.30 ($0.30)Fixed overhead$800,000 Budgeted March sales (diskettes)1,500,000 Total industry market for this product (diskettes)7,500,000 Budgeted CM per unit$4.16 1,425,000 Actual March results:Per UnitUnit sales realized as a % of budgeted amount95%Average selling price increased to$6.10 $6.1000 Total direct material cost per diskette$1.60 ($1.6000)Labor productivity dropped to 250 diskettes per hour 250 Direct manufacturing labor cost per hour$12.20 ($0.0488)Direct marketing costs/unit$0.25 ($0.2500)Fixed costs incurred were more than budgeted by$10,000 Industry market sales was 8,906,250 Actual CM per unit$4.2012 Required:1. Calculate the static-budget and actual operating incomes.3. Calculate the flexible-budget for operating income.4. Calculate the total flexible-budget variance for operating income.5. Calculate the total sales-volume variance for operating income2. Calculate the total static-budget variance for operating income.Actual OperatingIncomeFlexible-BudgetFlexibleSales-VolumeStaticActual (AXA)VarianceBudget (AXS)VarianceBudgetUnits sold1,425,000 0 1,425,000 (75,000)1,500,000 Sales$8,692,500 $142,500 $8,550,000 ($450,000)$9,000,000 Variable CostsDirect materials costs$2,280,000 ($142,500)$2,137,500 $112,500 $2,250,000 Direct manufacturing labor69,540 (12,540)57,000 3,000 60,000 Direct marketing costs356,250 71,250 427,500 22,500 450,000 Total Variable Costs$2,705,790 ($83,790)$2,622,000 $138,000 $2,760,000 Contribution Margin$4.1600 $4.2012 $5,986,710 $58,710 $5,928,000 ($312,000)$6,240,000 Fixed Costs810,000 ($10,000)800,000 $0 800,000 Operating Income$5,176,710 $48,710 $5,128,000 ($312,000)$5,440,000 (1)(4)(3)(5)(1)$48,710 ($312,000)$48,710 ($312,000)FavorableUnfavorableFlexible-Budget VarianceSales-Volume Variance(2)($263,290)($263,290)UnfavorableStatic-Budget Variance(Expanded)Actual Market SizeActual Market SizeActual Market SizeBudgeted Market SizeUnits sold1,425,000 Actual Market Share0.16 Actual Market ShareBudgeted Mkt. Share0.20 Budgeted Mkt. ShareActual market size8,906,250 Actual CM/Unit

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