The Continuum Company believes that their variances have causes beyond the mere components of each variance Therefore after calculating the variances for the current period, and gathering a few additional facts, the managers sat down and tried to draw the linkages between the variances using a cause and effect diagram Here is the data the managers collected Costs and Quantities Budgeted Sales in Units 10,000 units Actual Sales in Units 11,000 units Budgeted Sales Price $125 There were no beginning or ending inventoried of raw materials The actual number of units produced was 11,000 units The actual costs for the year were the following Budgeted Actual Variable Sales Commission 10 of Sales Price Budgeted Fixed Selling Administration $350,000 Actual Fixed Selling and Administration $352,000 Budgeted Market Size 100,000 units Actual Market Size 88,000 units Additional facts gathered The Purchasing Agents are evaluated on the total material variance (Actual Cost of Materials Used (Standard Price X Standard Quantity Allowed)) Sales volume increased this period compared to last period Production Volume increased to meet the increased demand Overtime decreased this period The Direct labor rate variance was $5,000 Unfavorable LAST period Machines need lubrication based on the machine hours run Lubricants are an indirect material included in Variable Overhead Required Determine the Actual, Flexible and Static Budgets Include the Flexible Budget Variances and the Sales Volume Variances Determine as many additional variances as possible, given the data presented 10,000 Budgeted number of Computers to be produced and sold Standard Cost per unit Direct Material 2 lbs per unit $ 5 per Ib Direct Labor 0 02 hrs per unit $ 30 per hr Variable Overhead 1 5 MH per unit $ 5 per hr Fixed Overhead 1 5 MH per unit $10 per hr $10 00 per unit $0 60 per unit $7 50 per unit $15 00 per unit $33 10 Based on production of 10,000 units Actual Sales Price Direct Material Pur and Used Direct Labor Variable Overhead Fixed Overhead 16,000 lbs at $ 5 08 per lb 199 00 hrs at $ 31 00 per hr 14,920 Machine Hours $122 50 per unit $ 81,280 $ 6,169 00 $ 77,300 $ 151,200

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The Continuum Company believes that their variances have causes beyond the mere components of each variance. Therefore after calculating the variances for the current period,

The Continuum Company believes that their variances have causes beyond the mere components of each variance. Therefore after calculating the variances for the current period, and gathering a few additional facts, the managers sat down and tried to draw the linkages between the variances using a cause and effect diagram.

Here is the data the managers collected:

Costs and Quantities:

image text in transcribed

Budgeted Sales in Units 10,000 units

Actual Sales in Units 11,000 units

Budgeted Sales Price $125

There were no beginning or ending inventoried of raw materials.

The actual number of units produced was 11,000 units.

The actual costs for the year were the following:

image text in transcribed

Budgeted & Actual Variable Sales Commission 10% of Sales Price

Budgeted Fixed Selling & Administration $350,000

Actual Fixed Selling and Administration $352,000

Budgeted Market Size 100,000 units

Actual Market Size 88,000 units

Additional facts gathered:

The Purchasing Agents are evaluated on the total material variance (Actual Cost of Materials Used (Standard Price X Standard Quantity Allowed))
Sales volume increased this period compared to last period.
Production Volume increased to meet the increased demand.
Overtime decreased this period.
The Direct labor rate variance was $5,000 Unfavorable LAST period.
Machines need lubrication based on the machine hours run.
Lubricants are an indirect material included in Variable Overhead.

Required:

Determine the Actual, Flexible and Static Budgets. Include the Flexible Budget Variances and the Sales Volume Variances.
Determine as many additional variances as possible, given the data presented.

10,000 Budgeted number of Computers to be produced and sold Standard Cost per unit: Direct Material 2 lbs. per unit $ 5 per Ib. Direct Labor 0.02 hrs. per unit $ 30 per hr. Variable Overhead 1.5 MH per unit $ 5 per hr. Fixed Overhead 1.5 MH per unit $10 per hr. $10.00 per unit $0.60 per unit $7.50 per unit $15.00 per unit* $33.10 *Based on production of 10,000 units. Actual Sales Price Direct Material Pur. and Used Direct Labor Variable Overhead Fixed Overhead 16,000 lbs. at $ 5.08 per lb. 199.00 hrs. at $ 31.00 per hr. 14,920 Machine Hours $122.50 per unit $ 81,280 $ 6,169.00 $ 77,300 $ 151,200