ACC 410 Lecture Notes - Income Statement, Fixed Cost
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The following budgeted and actual volume and cost data are forJuly of this year.
Prepare a flexible budget analysis for July of this year byfilling in the Flexible budget amounts based on the actual salesvolume and calculating the variances. DONâT FORGET TOINDICATE WHETHER THEY ARE FAVORABLE OR UNFAVORABLE!
Budget (per unit) | Budget | Actual | FLEXIBLE BUDGET | Variance | ||
Volume | 40,000 | 40,000 | 36,000 | 36,000 | ||
Sales Revenue | $70 per unit | $2,800,000 | $2,520,000 | |||
Budgeted manufacturing costs: | ||||||
Variable costs: | ||||||
Direct materials | $35.00 | $1,400,000 | $1,350,000 | |||
Direct labor | 15.00 | 600,000 | 580,000 | |||
Overhead | 5.00 | 200,000 | 180,000 | |||
Total fixed overhead costs | $450,000 | 450,000 | 406,000 | |||
Net Income before taxes | $150,000 | 4,000 |
The following data were drawn from the records of StuartCorporation.
Planned volume for year (staticbudget) | 4,100 | units | |||||
Standard direct materials costper unit | 3.00 | pounds | @ | $ | 1.60 | per pound | |
Standard direct labor cost perunit | 2.80 | hours | @ | $ | 4.50 | per hour | |
Total expected fixed overheadcosts | $ | 15,580 | |||||
Actual volume for the year(flexible budget) | 4,300 | units | |||||
Actual direct materials cost perunit | 2.70 | pounds | @ | $ | 2.00 | per pound | |
Actual direct labor cost perunit | 3.20 | hours | @ | $ | 4.20 | per hour | |
Total actual fixed overheadcosts | $ | 11,880 | |||||
Required
Prepare a materials variance information table showing thestandard price, the actual price, the standard quantity, and theactual quantity.
Calculate the materials price and usage variances. Indicatewhether the variances are favorable (F) or unfavorable (U).
Prepare a labor variance information table showing the standardprice, the actual price, the standard hours, and the actualhours.
Calculate the labor price and usage variances. Indicate whetherthe variances are favorable (F) or unfavorable (U).
Calculate the predetermined overhead rate, assuming that Stuartuses the number of units as the allocation base.
Calculate the fixed cost spending variance. Indicate whether thevariance is favorable (F) or unfavorable (U).
Calculate the fixed cost volume variance. Indicate whether thevariance is favorable (F) or unfavorable (U).
Prepare a materials variance information table showing thestandard price, the actual price, the standard quantity, and theactual quantity. (Round "Standard price" and "Actual price" to 2decimal places.)
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Calculate the materials price and usage variances. Indicatewhether the variances are favorable (F) or unfavorable (U). (Select"None" if there is no effect (i.e., zero variance).)
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Prepare a labor variance information table showing the standardprice, the actual price, the standard hours, and the actual hours.(Round "Standard price" and "Actual price" to 2 decimalplaces.)
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Calculate the labor price and usage variances. Indicate whetherthe variances are favorable (F) or unfavorable (U). (Select "None"if there is no effect (i.e., zero variance).)
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Calculate the predetermined overhead rate, assuming that Stuartuses the number of units as the allocation base. Calculate thefixed cost spending variance and the fixed cost volume variance.Indicate whether the variance is favorable (F) or unfavorable (U).(Round "Predetermined overhead rate" answer to 2 decimal places.Select "None" if there is no effect (i.e., zero variance).)
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