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 132.000 liters at a budgeted price of $315 per liter this year. The standard direct cost sheet for one liter of the preservative follows Direct materials Direct labor (2 pounds @ $29) (0.5 hours @ $56) $40 28 Variable overhead is applied based on direct labor hours. The variable overhead rate is $180 per direct labor hour. The fixed overhead rate (at the master budget level of activity) is $90 per unit. All non-manufacturing costs are fixed and are budgeted at $2.8 million for the coming year At the end of the year, the costs analyst reported that the sales activity variance for the year was $942.000 unfavorable. The following is the actual income statement in thousands of dollars) for the year $40,038 Sales revenue Less variable costs Direct materials Direct labor Variable overhead Total variable costs 4,218 1.170 1.090 5 6,478 $40,038 Sales revenue Less variable costs Direct materials Direct labor Variable overhead Total variable costs Contribution margin Less fixed costs Fixed manufacturing over head Non-manufacturing costs Total fixed costs Operating profit 4,218 1,170 1,090 $ 6, 478 $33,560 1, 210 1.390 $ 2,600 $30,960 equired: epare a profit variance analysis. (Enter your answers in thousands of dollars. Indicate the effect of each variance by selecting "F ir favorable, or "U" for unfavorable. If there is no effect, do not select either option.) PAYNESVILLE CORPORATION Profit Variance Analysis Manufacturing Non-Manufacturing Variances Variances Actual Sales Price Variance Flexible Budget Sales Activity Variance Sales revenue Materials Direct labor Variable overhead 40,038 4,218 1170 1.000 6.478 33.5601 $ 01 50 Total variable costs Contribution margin Fixed costs Manufactung 1.210 Non manufacturing 1390 2600 Total fixed costs Operating profits 5 of so 0601 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 132.000 liters at a budgeted price of $315 per liter this year. The standard direct cost sheet for one liter of the preservative follows Direct materials Direct labor (2 pounds @ $29) (0.5 hours @ $56) $40 28 Variable overhead is applied based on direct labor hours. The variable overhead rate is $180 per direct labor hour. The fixed overhead rate (at the master budget level of activity) is $90 per unit. All non-manufacturing costs are fixed and are budgeted at $2.8 million for the coming year At the end of the year, the costs analyst reported that the sales activity variance for the year was $942.000 unfavorable. The following is the actual income statement in thousands of dollars) for the year $40,038 Sales revenue Less variable costs Direct materials Direct labor Variable overhead Total variable costs 4,218 1.170 1.090 5 6,478 $40,038 Sales revenue Less variable costs Direct materials Direct labor Variable overhead Total variable costs Contribution margin Less fixed costs Fixed manufacturing over head Non-manufacturing costs Total fixed costs Operating profit 4,218 1,170 1,090 $ 6, 478 $33,560 1, 210 1.390 $ 2,600 $30,960 equired: epare a profit variance analysis. (Enter your answers in thousands of dollars. Indicate the effect of each variance by selecting "F ir favorable, or "U" for unfavorable. If there is no effect, do not select either option.) PAYNESVILLE CORPORATION Profit Variance Analysis Manufacturing Non-Manufacturing Variances Variances Actual Sales Price Variance Flexible Budget Sales Activity Variance Sales revenue Materials Direct labor Variable overhead 40,038 4,218 1170 1.000 6.478 33.5601 $ 01 50 Total variable costs Contribution margin Fixed costs Manufactung 1.210 Non manufacturing 1390 2600 Total fixed costs Operating profits 5 of so 0601
