PAGE 142 PRACTICE | Shapiro Systems Shapiro Systems assembles PCs and uses flexible budgeting and a standard cost system. Shapiro System allocates overhead based on the number of direct materials parts. The company's performance report includes the following: Master Budget BV Actual Results 20,500 PC's 22,500 PC's AV Sales 20,500 PC's x $415 $ 8,507,500 22,500 PC's x $435 $ 9,787,500 Variable Manufacturing Costs: BV XSQ= SP AP Direct Materials 205,000 parts x $9.50 1,947,500 218,500 parts x $9.30 2,032,050 Direct Labor 41,000 hours x $14.00 574,000 43,500 hours x $14.60 635, 100 Variable Overhead 205,000 parts x $3.90 799,500 218,500 parts x $4.00 874,000 Fixed Manufacturing Costs: Fixed Overhead 902,000 932,000 Total Cost of Goods Sold 4,223,000 4,473, 150 Gross Profit $ 4,284,500 $ 5,314,350 Direct Labor Rate Variance = Direct Labor Efficiency Direct Labor Sales Volume Variance = Variance = Direct Labor Flexible Budget Variance = Direct Labor Static Budget Variance = Direct Labor Rate Variance: Difference between the rate we actually paid per direct labor hour (AP) and the standard rate we planned on paying per direct labor hour (SP). List several reasons why a difference could exist. Direct Labor EFFICIENCY Variance: Difference between how many direct labor hours we actually used (AQ) and how many direct labor hours we should have used (SQ). List several reasons why a difference could exist. ACCT 201 | MANAGERIAL ACCOUNTING I CHAPTER 6 | PAGE 11