* Data Table Static Budget (1,025 recliners) $ 517,625 Actual Results (1,005 recliners) $ 497,475 52,890 52,920 Sales (1,025 recliners x $ 505 each) (1,005 recliners x $ 495 each) Variable Manufacturing Costs: Direct Materials (6,150 yds. @ $ 8.60 / yd.) (6,300 yds. @ $ 8.40 / yd.) Direct Labor (10,250 DLHr @ $ 9.30 / DLHr) (9,850 DLHr @ $ 9.40 / DLHr) Variable Overhead (6,150 yds @ $ 5.10 / yd.) (6,300 yds. @ $ 6.50 / yd.) Fixed Manufacturing Costs: Fixed Overhead 95,325 92,590 31,365 40,950 62,730 64,730 Total Cost of Goods Sold 242,310 275,315 S 251,190 246,285 Gross Profit Print Done Preston Recliners manufactures leather recliners and uses flexible budgeting and a standard cost system. Preston allocates overhead based on yards of direct materials. The company's performance report includes the following selected data: B Click the icon to view the selected data.) Read the requirements. Requirement 1. Prepare a flexible budget based on the actual number of recliners sold. (Round budget amounts per unit to the nearest cent.) Preston Recliners Flexible Budget Budget Amounts per Unit Actual Units (Recliners) Sales Revenue Variable Manufacturing Costs: Direct Materials Direct Labor Variable Overhead Fixed Manufacturing Costs: Fixed Overhead Total Cost of Goods Sold Gross Profit Requirement 2. Compute the cost variance and the efficiency variance for direct materials and for direct labor. For manufacturing overhead, compute the variable overhead cost, variable overhead efficiency, fixed overhead cost, and fixed overhead volume Choose from any list or enter any number in the input fields and then continue to the next question. Requirement 2. Compute the cost variance and the efficiency variance for direct materials and for direct labor. For manufacturing overhead, compute the variable overhead cost, variable overhead efficiency, fixed overhead cost, and fixed overhead volume variances. Round to the nearest dollar. Begin with the cost variances. Select the required formulas, compute the cost variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U). (Round your answers to the nearest whole dollar. Abbreviations used: AC = actual cost; AQ = actual quantity, FOH = fixed overhead; SC = standard cost; SQ = standard quantity.) Formula Variance Direct materials cost variance Direct labor cost variance Next compute the efficiency variances. Select the required formulas, compute the efficiency variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U). (Round your answers to the nearest whole dollar. Abbreviations used: AC = actual cost; AQ = actual quantity; FOH = fixed overhead; SC = standard cost; SQ = standard quantity.) Formula Variance Direct materials efficiency variance Direct labor efficiency variance Now compute the variable overhead cost and efficiency variances. Select the required formulas, compute the variable overhead cost and efficiency variances, and identify whether each variance is favorable (F) or unfavorable (U). (Round your answers to the nearest whole dollar. Abbreviations used: AC = actual cost; AQ = actual quantity, FOH = fixed overhead; SC = standard cost; SQ = standard quantity; VOH = variable overhead.) Formula Variance VOH cost variance VOH efficiency variance Now compute the fixed overhead cost and volume variances. Select the required formulas, compute the fixed overhead cost and volume variances, and identify whether each variance is favorable (F) or unfavorable (U). (Round your answers to the nearest Choose from any list or enter any number in the input fields and then continue to the next question. Now compute the fixed overhead cost and volume variances. Select the required formulas, compute the fixed overhead cost and volume variances, and identify whether each variance is favorable (F) or unfavorable (U). (Round your answers to the nearest whole dollar. Abbreviations used: AC = actual cost; AQ = actual quantity, FOH = fixed overhead; SC = standard cost; SQ = standard quantity.) Formula Variance FOH cost variance FOH volume variance Requirement 3. Have Preston's managers done a good job or a poor job controlling materials, labor, and overhead costs? Why? direct The variances computed in Requirement 2 suggest that the managers have done a labor cost variance and direct materials efficiency variance Managers have done a v job controlling materials and labor costs. The direct materials cost variance and direct labor efficiency variance help offset the job controlling overhead costs as evidenced by the fact that of the overhead variances are Requirement 4. Describe how Preston's managers can benefit from the standard costing system. Standard costing helps managers do the following: Choose from any list or enter any number in the input fields and then continue to the next question. Requirement 3. Have Preston's managers done a good job or a poor job controlling materials, labor, and overhead costs? Why? direct agers have done a agers have done a job controlling materials and labor costs. The direct materials cost variance and direct labor amiciency variance help offset the job controling overhead costs as evidenced by the fact that of the overhead variances are from the standard costing system. Create new products Decrease accounting costs Develop more efficient production methods Identify performance standards Increase production levels Increase sales volume Prepare the master budget Set sales prices of products and services Set target levels of performance for flexible budgets
