Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Pacific Company provides the following information about its budgeted and actual results for June 2014. Although the expected June volume was 25,000 units produced and

Pacific Company provides the following information about its budgeted and actual results for June 2014. Although the expected June volume was 25,000 units produced and sold, the company actually produced and sold 27,000 units as detailed here:

Budgeted 25,000 units

Actual 27,000 units

Selling price

$5

$5.23

Variable costs

Direct materials

$1.24

$1.12

Direct labor

$1.50

$1.40

Factory supplies

.25

.37

Utilities

.50

.60

Selling costs

.40

.34

Fixed costs

Depreciation machinery*

$3,750

$3,710

Depreciation building*

2,500

2,500

General liability insurance

1,200

1,250

Property taxes

500

485

Other administrative expense

750

900

* Indicates factory overhead item; $ 0.75 per unit or $ 3 per direct labor hour for variable overhead, and $ 0.25 per unit or $ 1 per direct labor hour for fixed overhead.

Standard costs based on expected output of 25,000 units

Per unit output Quantity to be used Total Cost

Direct materials, 4 oz. @ $0.31/oz

$1.24 per unit

100,000 oz

$31,000

Direct labor, .25 hours @ $6 per hour

$1.50 per unit

6,250 hours

37,500

Overhead

$1.00 per unit

25,000

Actual costs incurred to produce 27,000 units

Per unit output Quantity to be used Total Cost

Direct materials, 4 oz. @ $0.28/oz

$1.12 per unit

108,000 oz

$30,240

Direct labor, .20 hours @ $7 per hour

$1.40 per unit

5,400 hours

37,800

Overhead

$1.20 per unit

32,400

Standard costs based on expected output of 27,000 units

Per unit output Quantity to be used Total Cost

Direct materials, 4 oz. @ $0.31/oz

$1.24 per unit

108,000 oz

$33,480

Direct labor, .25 hours @ $6 per hour

$1.50 per unit

6,750 hours

40,500

Overhead

26,500

Required

Prepare June flexible budgets showing expected sales, costs, and net income assuming 20,000, 25,000, and 30,000 units of output produced and sold.

Prepare a flexible budget performance report that compares actual results with the amounts budgeted if the actual volume had been expected.

Apply variance analysis for direct materials and direct labor.

Compute the total overhead variance, and the controllable and volume variances.

Compute spending and efficiency variances for overhead.

Prepare journal entries to record standard costs, and price and quantity variances, for

direct materials, direct labor, and factory overhead.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions

Question

9. Explain the relationship between identity and communication.

Answered: 1 week ago

Question

a. How do you think these stereotypes developed?

Answered: 1 week ago

Question

a. How many different groups were represented?

Answered: 1 week ago