1-)
2-)
Paynesville Corporation manufactures and cells a preservative used in food and drug manufacturing. The company carries no Inventories. The master budget calls for the company to manufacture and sell 114,000 liters at a budgeted price of $180 per liter this year. The standard direct cost sheet for one liter of the preservative followe. Direct satoris Direct labor (2 pounds @ $11) (8.5 hours $38) $22 19 Variable overhead is applied based on direct labor hours. The variable overhead rate is $90 per direct-labor hour. The fixed overhend rate (at the master budget level of activity is $45 per unit. All non-manufacturing costs are fixed and are budgeted at $1.9 million for the coming year At the end of the year, the costs analyst reported that the sales activity variance for the year was $564,000 unfavorable. Required Prepare a flexible budget for Paynesville for the year. (Enter your answers in thousands of dollars.) Answer is complete but not entirely correct. PAYNE &VILLE CORPORATION Flexble Budget (thousands of dollars) Salesrovna Variable costs Mataas Direct labor Variable avemas s 20,620 2,608 2. 166 5,130 $ 9.804 S 10,716 To all costs Contribution margin Fixed costs Manufacturing om Nonrautachang IS DI 6.130 1.300 Total Towed coats Corting pretts 7.030 3.695 s 2 Po Corporan manufactures and preservative used in food and drug manufacturing The company cartes no The metrics for the company to manufacture and soll 122.000 mers at a budgeted price of $240 per liter this You The dard direct cost sheet for one or of the preservative follows 350 23 V overheadsed based on direct labor hours. The vartable overhead rate is $130 per direct labor hour. The food overhead the most budget level of act) 1 565 per unit. All non-manufacturing costs are food and are budgeted at $2.3 million for coming out At the end of the year, the costs analyet reported that the sales activity variance for the year was $732.000 unfavorable. The following the actual income statemerit din thousands of dollars) for the year, 2,11 Lot Direct starts Dirt Var Yotal warble costs Gwibutton an Lists acturing over 2. 2. 7. 512AZER 510,30 $12, Duning the year, the company purchased 198,000 pounds of material and employed 51400 hours of direct labor Required a compute the direct material price and officiency variances b. Compute the direct labor police and officiency variances Compute the variable overhead price and efficiency variances For all requirements, enter your answers in whole dollars. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option) Answer is complete but not entirely correct. Pricano Elcancy Direct 28.000 DOSCOPE $12,788 $15,350 Total Variable costs Contribution margin tess Fed costs Fixed manufacturing overhead Mon-anufacturing costs Total fixed costs Operating profit 1,160 1,340 $2,500 $12,850 During the year, the company purchased 198,000 pounds of material and employed 51,400 hours of Required: a. Compute the direct material price and efficiency variances. b. Compute the direct labor price and efficiency variances. c Compute the variable overhead price and efficiency varlances. (For all requirements, enter your answers in whole dollars. Indicate the effect of each variance "U" for unfavorable. If there is no effect, do not select either option) Answer is complete but not entirely correct. a U IS 28,000 $ (690.600) DIS F b. Direct materials: Price variance Efficiency variance Direct labor Price variance Efficiency variance Variable overhead Price variance Efficiency variance $ 295,800 U (441.600) F O s 448.000U 1,248,000) * F >
