The accountant at EZ Toys, Inc. is analyzing the production and cost data for its Trucks Division. For October, the actual results and the master budget data are presented below.

Actual results

Budget data

12,000 trucks produced

10,000 trucks sold

12,000 trucks planned

Unit selling price

$15

Unit selling price

$14

Unit variable costs:^a

Unit variable cost:

Direct materials

$5.28

Direct materials

$5

Direct labor

5.10

Direct labor

4

Variable overhead

2.30

Variable overhead

2

Total variable costs

$12.68

Total unit variable costs

$11

Fixed overhead

$9,000

Fixed overhead

$9,600

^aThese are average costs.

Required:

Prepare profit variance analysis.

Problem 2

Required:

Reconcile reported income using standard, full-absorption costing with that using standard, variable costing for the Trucks Division of EZ Toys in October.

Problem 3

Information about the use of direct materials at EZ Toys' Trucks Division for October is as follows:

Standard costs:

2 units per truck @ $2.50 per unit

=

$5 per truck

Trucks produced in October

=

10,000

Actual materials purchased:

23,200 units @ $2.40 per unit

=

$55,680

Actual materials used:

22,000 units @ $2.40 per unit

=

$52,800

There was no beginning inventory on October 1.

Required:

Prepare the Truck Division's direct materials variances for October.

Problem 4

EZ Toys' marketing manager estimated the sales of 12,000 trucks in October for the Trucks Division based on an estimated industry volume of 80,000 trucks and on the Trucks Division's ability to maintain a market share of 15 percent in the past. That is,

80,000 trucks to be sold in the market 15% of estimated market share = 12,000 trucks.

Due to unexpected shift in demand, the industry volume in toy truck sales dropped to 62,500 units in October while EZ Toys' Trucks Division managed to sell a total of 10,000 units.

The following information is also available.

Budget Data

Unit selling price

$14

Unit variable cost:

Direct materials

$5

Direct labor

4

Variable overhead

2

Total unit variable costs

$11

Required:

Prepare October's industry volume and market share activity variances for the Trucks Division of EZ Toys.

Problem 5

EZ Toys' Stuffed Animals Division has two products: Bear and Monkey. Data on the two products for October are as follows.

Bear

Monkey

Total

Standard selling price

$20

$12

Standard variable costs

12

8

Standard unit contribution margin

$8

$4

Budgeted sales quantity

2,500

7,500

10,000

Budgeted sales mix

25%

75%

Budgeted contribution margin

$20,000

$30,000

$50,000

Actual sales quantity

3,000

5,000

8,000

Actual sales mix

37.5%

62.5%

Budgeted contribution margin at actual quantities

$24,000^a

$20,000

$44,000

Sales activity variance

$6,000 U^b

^a$24,000 = $8 3,000 units

^b$6,000 U = $44,000 - $50,000

Required:

Determine the Stuffed Animals Division's sales mix and sales quantity variances for October.