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Top Managers of Kyler Industries predicted 2018 Sales of 14,500 units of its product at a unit price of $7.00. Actual sales for the year were 14,200 units at $11.50 each. Variable costs were budgeted at $2.40 per unit, and actual variable cost were $2.50 per unit. Actual fixed costs of $43,000 exceeded budgeted foxed cost by $4,600. Prepare Kyler's Flexible budget performance report. What variance contributed most to the year's favorible results? What caused this variance? Prepare flexible budget performance report for the year. First, complete flexible budget performance report through the contributuion margin line, then complete the report through the operating income line. Finally, compute the total variances. (Enter a "0" for any zero balances. For any $0 variances, leave the Favorable (f)/ Unfavorable (U) input blank Kyler Industries Flexible Budget Performance Report For the Year Ended December 31, 2018 1 2 3 4 5 (1) - (3) (3) - (5) Budget Flexible Sales Amounts Actual Budget Flexible Volume Static Per Unit Results Variance Budget Variance Budget Units Sales Revenue S S S 4 $ S Variable Costs Contribution Margin Fixed Cost Operating income S S S $ Flexible Budget Variance Sales Volume Variance S Static Budget Variance S What variance contributed most to the year's favorite results? What caused this variance? The variance contributing most to the year's excellent results is the favorable This variance resulted from selling the company's product atGreat, Inc. produced 1,000 units of the company's product in 2018. The standard quantity of direct materials was three yards of cloth per unit at a standard cost of $1.10 per yard. The accounting records showed that 2,600 yards of cloth were used and the company paid $1.15 per yard. Standard time was two direct labor hours per unit at a standard rate of $10.25 per direct labor hour. Employees worked 1,900 hours and were paid $9.75 per hour. Read the requirements. Requirements X Requirement 1. What are the benefits of setting cost standards? Standard costing helps managers do the following: Decrease accounting costs 1. What are the benefits of setting cost standards? Set target levels of performance for flexible budgets 2. Calculate the direct materials cost variance and the direct materials efficiency variance as well as the direct labor cost and efficiency variances. Identify performance standards Set sales prices of products and services Print Done Prepare the master budget Requirement 2. Calculate the direct materials cost variance and the direct materials efficiency variance as well as the direct labor cost and efficiency variances. Begin with the cost variances. Select the required formulas, compute the cost variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U). (Abbreviations used: AC = actual cost; AQ = actual quantity; FOH = fixed overhead; SC = standard cost; SQ = standard quantity.) Formula Variance Direct materials cost variance Direct labor cost variance
