Surrey Bikes, Inc. manufactures double bench bikes for resorts and other vacation properties. Management now wants the accountants to complete an analysis to compare the budgeted costs to standard costs for 2021. During the year 2021, the company completed 680 bikes. Let's discuss changes from budget and standard that occurred during 2021. Overall, the company was able to increase several efficiencies. However, the company also experienced some increased costs. Use this information to complete the CH24 Budet Variances tab; the green section. I WILININIS NEW UNIWWWMWWWWWWWWWWWWWW/ Electrical Parts Direct Materials The purchase price, net of discounts increase by $2.50 per set. There was also an increase in freight of by $0.25 per set. Wheel Sets Direct Materials: The company was able to secure the same wheel sets from a new supplier at a cost of $37/set. However, freight cost increased by $0.50 per wheel set. Metal Parts Direct Materials: The company was also able to reduce the amount of material used for each bike by 3 pounds. The acual cost of the metal parts was $0.52 per pound. Canvas Fabric Direct Materials: The company was also able to reduce the amount of material used for each bike by one-half a yard. The acual cost of the canvas fabric was $4.95 per yard. Direct labor: Employees were tasked with increasing equipment assembly and decreasing labor hours. They were successful in 2021 and brought hours down by 5/hours/unit! The company provided a $1/hour raise! This also lead to an increase of $0.25/hour in payroll taxes. Manufacturing overhead: There were no changes in manufacturing overhead, no variance needs to be computed Using this information, computer the budget variances incurred during 2021. Management had to borrow some money from the bank to start the business five years ago. As a result, they still have some interest expense. It is $10,000 per year. Management anticipates a 20% tax rate for 2021. Surrey Bikes, Inc. Budget Income Statement For the Year Ended December 31, 2021 $ 1,980,000 Sales *Cost of goods sold Gross profit Selling and administrative expenses Income from operations Interest expense Income before income taxes Income tax expense Net Income Unit Cost Total *Supplemental Schedule - COGS Cost Budget per Unit Cost Element Electrical sets direct materials: Wheels - set of 4 direct materials Metal parts direct materials: Canvas direct materials: Direct labor Manufacturing overhead - machine hours Total COGS Budget per Unit Quantity set set pounds yards hour hour
