Question
Shyemaa Company started business on 1/1/2008. The static (Master) budget shows that the company is planning to produce and sell 25,000 units of product R
Shyemaa Company started business on 1/1/2008. The static (Master) budget shows that the company is planning to produce and sell 25,000 units of product R at a selling price of $50 per unit. Budgeted sales for 2008 is based on an estimated market share of 10 percent. The Company uses direct labor hours as an allocation base to apply both variable factory overhead and fixed factory overhead. The following information is available on 1/1/2008:
Budgeted direct labor hours ? Hours
Budgeted variable overhead costs $ 75,000
Budgeted fixed overhead costs $150,000
The standard costs per unit of output are as follows:
Direct material: ? yard @ $? Per yard = $10.5/unit of output
Direct labor: 1.5 hour @. $8.0 per hour = $ 12.00/unit of output
Variable FOH ?
Fixed FOH ?
The following additional information is available for the year ended December 31, 2005:
(a) The company produced and sold 20,000 units at a price of $60 per unit.
(b) The company purchased 100,000 yards of material during the year for a total cost of $320,000. There was no beginning inventory of material. The ending inventory of material was $70,400. The DM price variance was $23,400 F. The company isolates the DM price variance at the point of production.
(c) The actual cost of direct labor cost for the period is $243,750. The total Flexible budget variance for direct labor is $3,750 U. The actual wage rate per hour is $7.5/hour.
(d) Data related to overhead costs follow:
Actual variable overhead costs $45,000
Actual fixed overhead costs $148,000
(e) The actual industry sales during 2008 were 225,000 units.
Calculate the following variances:
2. The standard price per yard of Raw Material and the DM quantity (efficiency) variances
3. Direct Labor price variance and DL quantity (efficiency) variance.
4. Variable overhead spending and efficiency variances.
5. Fixed overhead spending and denominator (production volume) variance.
Calculate the following variances:
1. All possible sales variances.
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