1. What are the static budget, sales volume, and flexible budget variances for direct materials? Which of these variances will be the most informative and why? 2. What are the static budget, sales volume, and flexible budget variances for direct labor? 3. Does the problem appear to be in materials or labor? Why? 4. Calculate each raw material's price and quantity (efficiency)variances. 5. Calculate the rate (price) and efficiency variances for all three types of Direct Labor. 6. Prepare a statement for the Board, detailing what the root cause of Roberts' problems with the new line may be. A B D E $ 1 Static Budget Flexible Budget Actual Results 2 Revenue $ 456,250 $ 591,100 3 Direct Materials $ 183,750 $ 441,792 4. Direct Labor $ 30,625 $ 48,325 5 Applied MOH $ 36,750 $ 45,100 6 Gross Profit $ 205,125 $ 55,883 7 8 Notes: In this division we had no beginning or ending inventorys of direct materials or finished goods. 10 Manufacturing overhead is a fixed expense. 11 12 Actual Units Sold: 150,000 1 13 A B D E 1 Actual DM and DL Costs Quantity Used 200,000 1,100,000 1,312,923 58,570 175,000 8,540 $ $ $ $ $ $ Total Cost 40,802 237,000 31,385 114,454 13,000 5,151 Hours Worked 1,550 1,100 600 $ $ $ Total Cost 18,200 18,125 12,000 3 Direct Materials 4 Bags 5 Potatoes 6 Sea Salt (dashes) 7 Oil (Gallons) 8 Labels 9 Packaging Boxes 10 11 Direct Labor 12 Apprentice 13 Chip Maker 14 Chip Master 15 16 17 Budgeted DM and DL Costs (Standards) 18 19 Direct Materials 20 Bags 21 Potatoes 22 Sea Salt (dashes) 23 Oil (Gallons) 24 Labels 25 Packaging Boxes 26 27 Direct Labor 28 Apprentice 29 Chip Maker 30 Chip Master 31 32 33 The budgeted selling price was $3.65. 34 Estimated Qty per Bag Cost per DM unit 0.10 1 $ $ 5 0.19 6 1/8 1 1/20 $ $ $ $ 0.02 1.92 0.04 0.40 Estimated hours per batch 0.15 0.12 0.08 $ $ $ Rate per hour 10.00 15.00 20.00 1. What are the static budget, sales volume, and flexible budget variances for direct materials? Which of these variances will be the most informative and why? 2. What are the static budget, sales volume, and flexible budget variances for direct labor? 3. Does the problem appear to be in materials or labor? Why? 4. Calculate each raw material's price and quantity (efficiency)variances. 5. Calculate the rate (price) and efficiency variances for all three types of Direct Labor. 6. Prepare a statement for the Board, detailing what the root cause of Roberts' problems with the new line may be. A B D E $ 1 Static Budget Flexible Budget Actual Results 2 Revenue $ 456,250 $ 591,100 3 Direct Materials $ 183,750 $ 441,792 4. Direct Labor $ 30,625 $ 48,325 5 Applied MOH $ 36,750 $ 45,100 6 Gross Profit $ 205,125 $ 55,883 7 8 Notes: In this division we had no beginning or ending inventorys of direct materials or finished goods. 10 Manufacturing overhead is a fixed expense. 11 12 Actual Units Sold: 150,000 1 13 A B D E 1 Actual DM and DL Costs Quantity Used 200,000 1,100,000 1,312,923 58,570 175,000 8,540 $ $ $ $ $ $ Total Cost 40,802 237,000 31,385 114,454 13,000 5,151 Hours Worked 1,550 1,100 600 $ $ $ Total Cost 18,200 18,125 12,000 3 Direct Materials 4 Bags 5 Potatoes 6 Sea Salt (dashes) 7 Oil (Gallons) 8 Labels 9 Packaging Boxes 10 11 Direct Labor 12 Apprentice 13 Chip Maker 14 Chip Master 15 16 17 Budgeted DM and DL Costs (Standards) 18 19 Direct Materials 20 Bags 21 Potatoes 22 Sea Salt (dashes) 23 Oil (Gallons) 24 Labels 25 Packaging Boxes 26 27 Direct Labor 28 Apprentice 29 Chip Maker 30 Chip Master 31 32 33 The budgeted selling price was $3.65. 34 Estimated Qty per Bag Cost per DM unit 0.10 1 $ $ 5 0.19 6 1/8 1 1/20 $ $ $ $ 0.02 1.92 0.04 0.40 Estimated hours per batch 0.15 0.12 0.08 $ $ $ Rate per hour 10.00 15.00 20.00
