Question
Problem 1: Peaceful Corporation manufactures figurines based on the following information. Standard costs $20 Materials (4 ounces at $5) $8 Direct labor (1 hour per
Problem 1:
Peaceful Corporation manufactures figurines based on the following information.
Standard costs | $20 | |
Materials (4 ounces at $5) | $8 | |
Direct labor (1 hour per unit) | $4 | |
Variable overhead (based on direct labor hours) | ||
Fixed overhead budget | $19,000 | |
Actual results and costs | ||
Materials purchased | ||
Units | 9,000 | |
Cost | $39,600 | |
Materials used in production | ||
Finished product units | 2,000 | |
Raw material (ounces) | 8,200 | |
Direct labor hours | 2,000 | |
Direct labor cost | $20,000 | |
Variable overhead costs | $5,980 | |
Fixed overhead costs | $19,500 |
Required:
- Prepare a performance report for Peaceful using the following headings.
- Actual Production Costs
- Flexible Budget Costs
- Flexible Budget Variances
- Compute the following variances (show calculations).
- Materials usage variance
- Labor rate variance
- Labor efficiency variance
- Variable overhead spending variance
- Variable overhead efficiency variance
- Fixed overhead budget variance
- Give one possible explanation for each of the six variances computed in part b.
Problem 2:
The following is the current variable costing income statement for Dolly Corporation.
Sales (5,000 units) | $100,000 | |
Variable expenses Cost of goods sold | $35,000 | |
Selling (10% of sales) | $10,000 | $45,000 |
Contribution margin | $55,000 | |
Fixed expenses | ||
Manufacturing overhead | $24,000 | |
Administrative | $12,500 | $36,500 |
Operating income | $18,500 |
Below is the following information on operations for Dolly Corporation.
Beginning inventory (units) | 0 |
Units produced (units) | 6,000 |
Manufacturing costs | |
Direct labor (per unit) | $5.00 |
Direct materials (per unit) | $2.30 |
Variable overhead (per unit) | $2.40 |
Required: Prepare an absorption costing income statement.
Problem 3:
The following information was compiled for two models of cell phones.
3G model | 4G model | Average | |
Budgeted Contribution Margin | $80.00 | $120.00 | $95.25 |
Budgeted Sales in Units | 28,000 | 18,000 | |
Actual Sales in Units | 28,600 | 16,500 |
Required: Calculate the sales mix variance. (Show your calculations.)
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