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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

  1. Determine the sales price variance.
  2. Determine the flexible budget for direct labor and variable overhead costs.
  3. Determine the direct labor price and efficiency variances.
  4. Determine the fixed overhead spending variance.
  5. What is a possible explanation for the direct labor efficiency variance?

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