Please explain how you got answers, thanks.
Problem 6-30 (Part Level Submission) Lexi Belcher picked up the monthly report that Irvin Santamaria left on her desk. She smiled as her eyes went straight to the bottom line of the report and saw the favorable variance for operatin g income, confirming her decision to push the workers to get those last 340 the production line before the end of the month But as she glanced over the rest of numbers, Lexi couldn't help but wonder if there were errors in some of the line items. She was puzzled how most of the operating expenses could be higher than the budget since she had worked hard to manage the production line to ir efficiency and reduce costs. Yet the report, shown below, showed a different story Actual Budget 9,910 $1,853,200 545,050 257,660 277,480 89,190 39,640 644,180 109,010 69,370 128,830 $336,970 Variance Cases produced and sold Sales revenue Direct material Direct labor Variable manufacturing overhead Variable selling expenses Variable adm inistrative expenses Contribution margin Fixed manufacturing overhead Fixed selling expenses Fixed administrative expenses Operatin g income 340 Favorable 10,250 $1,930,000 555,951 265,241 282,447 92,292 41,364 692,705 110,001 68,875 128,632 $385,197 $76,800 Favorable 10,901 Unfavorable 7,581 Unfavorable 4,967 Unfavorable 3.102 Unfavorable 1.724 Unfavorable 48,525 Favorable 991 Unfavorable 495 Favorable 198 Favorable $48,227 Favorable Lexi picked up the ph one and called Irvin. "Irvin, I don 't get it. We beat the budgeted operating income for the month, but look at all the unfavorable variances on the operating costs. Can you help me understand what's going on?" "Let me look into it and I'll get back to Irvin replied Irvin gathered the following additional information about the month's performance . Direct materials purchased: 101,082 pounds at a total of $555,951 . Direct materials used: 101,082 pounds . Direct labor hours worked: 26,262 at a total cost of $265,241 . Machine hours used: 40,581 Irvin also found the standard cost card for a case of product Standard Standard Price $5.5 per pound $10 per DLH $7 per MHH $2.73 per MH Standard Quantity Cost Direct m aterials Direct labor Variable overhead Fixed overhead Total standard cost per case 10 pounds 2.58 DLH 4 MH 4 MH $55 25.80 28.00 10.92 $119.72
