2. Gray System assembles PCs and uses flexible budgeting and a standard cost system. Gray System allocates overhead based on the number of direct materials parts. The company's performance report includes the following selected d Print (Click the icon to view the selected data.) Requirements Requirement 1. Determine the company's standard cost for one unit. First, select the formula, then compute the standard cost per unit. (Round your answer to the nearest cent.) (2) Standard cost per unit = Requirement 2. Prepare a flexible budget based on the actual number of PCs sold. Gray System Flexible Budget for Actual Outputs Sales revenue Variable manufacturing expenses: Direct materials Direct labour Variable overhead Fixed expenses: Fixed overhead Total cost of goods sold Gross profit Requirement 3. Compute the price variance for direct materials and for direct labour. Begin by determining the formula for the price variance, then compute the price variances for direct materials (DM) and direct labour (DL). (Enter the results as positive numbers. Label each variance as favourable (F) or unfavourable (U).) (3) (4) ) x (5) Price variance (6) DM X (7) DL ) Requirement 4. Compute the efficiency variances for direct materials and direct labour. Begin by determining the formula for the efficiency variance, then compute the efficiency variances for direct materials (DM) and direct labour (DL). (Enter the results as positive numbers. Label each variance as favourable (F) or unfavourable (U).) (8) (9) (10) Efficiency variance Requirement 2. Prepare a flexible budget based on the actual number of PCs sold. P Gray System Flexible Budget for Actual Outputs Sales revenue Variable manufacturing expenses: Direct materials Direct labour Variable overhead Fixed expenses: Fixed overhead Total cost of goods sold Gross profit Requirement 3. Compute the price variance for direct materials and for direct labour. Begin by determining the formula for the price variance, then compute the price variances for direct materials (DM) and direct labour (DL). (Enter the results as positive numbers. Label each variance as favourable (F) or unfavourable (3) ) x (5) Price variance (6) DM ( ) (7) DL ( ) x Requirement 4. Compute the efficiency variances for direct materials and direct labour. Begin by determining the formula for the efficiency variance, then compute the efficiency variances for direct materials (DM) and direct labour (DL). (Enter the results as positive numbers. Label each variance as favourable (F) or unfavourable (U).) (8) (9) ) x (10) Efficiency variance (11) DM ( 1x (12) DL ( x Print (8) (9) ) x (10) Efficiency variance |(11) DM ) x (12) DL 1x Requirement 5. For manufacturing overhead, compute the total variance, the flexible budget variance, and the production volume variance. (Enter the results as positive numbers. Label each variance as favourable (F) or unfavourable (U).) Gray System Manufacturing Overhead Variances Total overhead variance: Actual overhead cost Standard overhead allocated to production (13) Total overhead variance Overhead flexible budget variance: Actual overhead cost Flexible budget overhead for actual outputs (14) Overhead flexible budget variance Production volume variance: Flexible budget overhead for actual outputs Standard overhead allocated to production (15) Production volume variance Requirement 6. What is the total flexible budget variance for Gray System's manufacturing costs? Show how the total flexible budget variance is divided into materials, labour, and overhead variances. (Enter the results as positive numbers. Label each variance as favourable (F) or unfavourable (U).) Total actual manufacturing costs Total flexible budget manufacturing costs (16) Total flexible budget variance for manufacturing costs Requirement 6. What is the total flexible budget variance for Gray System's manufacturing costs? Show how the total flexible budget variance is divided into materials, labour, and overhead variances. (Enter the results as positive nu Label each variance as favourable (F) or unfavourable (U).) Print Total actual manufacturing costs Total flexible budget manufacturing costs (16) Total flexible budget variance for manufacturing costs Direct material variances: (17) Price (18) Efficiency (19) Total material variances DI Direct labour variances: (20) Price (21) Efficiency (22) Total direct labour variances (23) Overhead flexible budget variance (24) Total flexible budget variance for manufacturing costs Requirement 7. Have Gray System's managers done a good job or a poor job controlling material and labour costs? Why? direct materials price variance, direct materials efficiency The variances computed in Requirements 3 and 4 suggest that the managers have done a (25) job controlling materials and labour costs. The (26). variance, and direct labour efficiency variance far outweigh the (27) direct labour price variance. Requirement 8. Describe how Gray System's managers can benefit from the standard costing system. Select five benefits managers may have from the standard costing system. Standards: (28) (29) (30) (31) Requirement 7. Have Gray System's managers done a good job or a poor job controlling material and labour costs? Why? Print direct materials price variance, direct materials efficiency The variances computed in Requirements 3 and 4 suggest that the managers have done a (25) job controlling materials and labour costs. The (26) variance, and direct labour efficiency variance far outweigh the (27) direct labour price variance. Requirement 8. Describe how Gray System's managers can benefit from the standard costing system. Select five benefits managers may have from the standard costing system. Standards: (28) (29) (30) (31) (32) 1: Data Table Actual Results Static Budget (20,000 PCs) $ 7,700,000 (22,000 PCs) Sales (20,000 PCS x $385) $ 8,910,000 2,060,000 2,151,300 (22,000 PCs x $405) Variable manufacturing expenses: Direct materials (200,000 parts x $10.30) (213,000 parts x $10.10 ) Direct labour (40,000 hrs. x $14.50 ) (42,500 hrs. x $15.10 ) Variable overhead (200,000 parts x $ 4.00) (213,000 parts x $ 4.10 ) 580,000 641,750 800,000 873,300 Fixed manufacturing expenses: Fixed overhead 900,000 930,000 Total cost of goods sold 4,340,000 4,596,350 $ 3,360,000 $ Gross profit 4,313,650 2. Requirements Print (28) (29) (30) (31) (32) 1: Data Table Static Budget Actual Results (22,000 PCs) (20,000 PCs) $ 7,700,000 Sales (20,000 PCs x $385) $ 8,910,000 2,060,000 2,151,300 (22,000 PCs x $405) Variable manufacturing expenses: Direct materials (200,000 parts x $10.30 ) (213,000 parts x $10.10 ) Direct labour (40,000 hrs. x $14.50 ) (42,500 hrs. x $15.10 ) Variable overhead (200,000 parts x $ 4.00) (213,000 parts x $ 4.10 ) 580,000 641,750 800,000 873,300 Fixed manufacturing expenses: Fixed overhead 900,000 930,000 4,340,000 4,596,350 Total cost of goods sold $ 3,360,000 $ 4,313,650 Gross profit 2: Requirements 1. Determine the company's standard cost for one unit. 2. Prepare a flexible budget based on the actual number of PCs sold. 3. Compute the price variance for direct materials and for direct labour. 4. Compute the efficiency variances for direct materials and direct labour. 5. For manufacturing overhead, compute the total variance, the flexible budget variance, and the production volume variance. 6. What is the total flexible budget variance for Gray System's manufacturing costs? Show how the total flexible budget variance is divided into materials, labour, and overhead variances. 7. Have Gray System's managers done a good job or a poor job controlling material and labour costs? Why? 8. Describe how Gray System's managers can benefit from the standard costing system