Question 3

The president of the company, Gregory Peters, has come to you for help. Use the

following data to prepare the budgets for possible sales/production levels of 10,000,

11,000, and 12,000 units. Show the contribution margin and operating income for

every budget.

Sales price $24 per unit

Variable costs:

Materials $12 per unit

Labor $ 3 per unit

Others $ 1 per unit

Fixed costs:

Manufacturing $60,000

Administrative $20,000

Question 4

Giving the following information:

1. Actual materials input used 8,500 KG
2. Actual labor input used 3,500 hours
3. Actual price of materials per unit $16
4. Actual price of labor per hour $10
5. Flexible budget price of materials per unit $18
6. Flexible budget price of labor per hour $8.5
7. Flexible budget units of materials 8,000KG
8. Flexible budget hours of labor 3,200 hours

Required:

1. The price variance for both materials and labor
2. The efficiency variance for both materials and labor.