Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Paynesville Corporation manufactures and sells a preservative used in food and drug manufacturing. The company carries no inventories. The master budget calls for the

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

Paynesville Corporation manufactures and sells a preservative used in food and drug manufacturing. The company carries no inventories. The master budget calls for the company to manufacture and sell 130,000 liters at a budgeted price of $300 per liter this year. The standard direct cost sheet for one liter of the preservative follows. Direct materials Direct labor (2 pounds @ $19) (0.5 hours @ $54) $38 27 Variable overhead is applied based on direct labor hours. The variable overhead rate is $170 per direct-labor hour. The fixed overhead rate (at the master budget level of activity) is $85 per unit. All non-manufacturing costs are fixed and are budgeted at $2.7 million for the coming year. At the end of the year, the costs analyst reported that the sales activity variance for the year was $900,000 unfavorable. The following is the actual income statement (in thousands of dollars) for the year.

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

Recommended Textbook for

Financial Accounting

Authors: David Spiceland, Wayne Thomas, Don Herrmann

4th edition

1259307956, 978-1259307959

More Books

Students also viewed these Accounting questions