Answered step by step
Verified Expert Solution
Question
1 Approved Answer
LittleJo manufactures wooden playsets. Information related to the sale and production during the year are as follows: Actual Static Budget Units sold 14,200 13,500 Revenue
LittleJo manufactures wooden playsets. Information related to the sale and production during the year are as follows:
| Actual | Static Budget |
Units sold | 14,200 | 13,500 |
Revenue | 21,200,000 | 20,000,000 |
Variable costs: |
|
|
Direct material | 11,900,000 | 10,800,000 |
Direct labor | 3,400,000 | 3,577,500 |
Variable manuf. overhead | 4,000,000 | 4,006,800 |
Total | 19,300,000 | 18,384,300 |
Contribution margin | 900,000 | 1,615,700 |
Fixed costs | 500,000 | 450,000 |
Operating income | 400,000 | 1,165,700 |
- Additional direct material information:
- Direct materials are budgeted at 400 feet per playset and $2.00 per foot.
- Actual direct materials used totaled 5,800,000 feet.
- Additional direct labor information:
- Direct labor is budgeted at 10.6 hours per playset and a $25 hourly rate
- Actual labor hours incurred totaled 135,000 hours
- Additional overhead information:
- Activity driver is direct labor hours
Please Show Work
- Determine the sales price variance.
- Determine the flexible budget for direct labor and variable overhead costs.
- Determine the direct labor price and efficiency variances.
- Determine the fixed overhead spending variance.
- What is a possible explanation for the direct labor efficiency variance?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started