Problem 1:
Peaceful Corporation manufactures figurines based on thefollowing information.
Standard costs
$20
Materials (4 ounces at $5)
$8
Direct labor (1 hour per unit)
$4
Variable overhead (based on direct labor hours)
Fixed overhead budget
$19,000
Actual results and costs
Materials purchased
Units
9,000
Cost
$39,600
Materials used in production
Finished product units
2,000
Raw material (ounces)
8,200
Direct labor hours
2,000
Direct labor cost
$20,000
Variable overhead costs
$5,980
Fixed overhead costs
$19,500
Required:
- Prepare a performance report for Peaceful using the following headings.
-
- Actual Production Costs
- Flexible Budget Costs
- Flexible Budget Variances
- Compute the following variances (show calculations).
-
- Materials usage variance
- Labor rate variance
- Labor efficiency variance
- Variable overhead spending variance
- Variable overhead efficiency variance
- Fixed overhead budget variance
- Give one possible explanation for each of the six variances computed in part b.
Problem 2:
The following is the current variable costing income statementfor Dolly Corporation.
Sales (5,000 units)
$100,000
Variable expenses Cost of goods sold
$35,000
Selling (10% of sales)
$10,000
$45,000
Contribution margin
$55,000
Fixed expenses
Manufacturing overhead
$24,000
Administrative
$12,500
$36,500
Operating income
$18,500
Below is the following information on operations for DollyCorporation.
Beginning inventory (units)
0
Units produced (units)
6,000
Manufacturing costs
Direct labor (per unit)
$5.00
Direct materials (per unit)
$2.30
Variable overhead (per unit)
$2.40
Required:
Prepare an absorption costing income statement.
Problem 3:
The following information was compiled for two models of cellphones.
3G model
4G model
Average
Budgeted Contribution Margin
$80.00
$120.00
$95.25
Budgeted Sales in Units
28,000
18,000
Actual Sales in Units
28,600
16,500
Required:
Calculate the sales mix variance. (Show your calculations.)
Problem 1:
Peaceful Corporation manufactures figurines based on thefollowing information.
| Standard costs | $20 | |
| Materials (4 ounces at $5) | $8 | |
| Direct labor (1 hour per unit) | $4 | |
| Variable overhead (based on direct labor hours) | ||
| Fixed overhead budget | $19,000 | |
| Actual results and costs | ||
| Materials purchased | ||
| Units | 9,000 | |
| Cost | $39,600 | |
| Materials used in production | ||
| Finished product units | 2,000 | |
| Raw material (ounces) | 8,200 | |
| Direct labor hours | 2,000 | |
| Direct labor cost | $20,000 | |
| Variable overhead costs | $5,980 | |
| Fixed overhead costs | $19,500 |
Required:
- Prepare a performance report for Peaceful using the following headings.
- Actual Production Costs
- Flexible Budget Costs
- Flexible Budget Variances
- Compute the following variances (show calculations).
- Materials usage variance
- Labor rate variance
- Labor efficiency variance
- Variable overhead spending variance
- Variable overhead efficiency variance
- Fixed overhead budget variance
- Give one possible explanation for each of the six variances computed in part b.
Problem 2:
The following is the current variable costing income statementfor Dolly Corporation.
| Sales (5,000 units) | $100,000 | |
| Variable expenses Cost of goods sold | $35,000 | |
| Selling (10% of sales) | $10,000 | $45,000 |
| Contribution margin | $55,000 | |
| Fixed expenses | ||
| Manufacturing overhead | $24,000 | |
| Administrative | $12,500 | $36,500 |
| Operating income | $18,500 |
Below is the following information on operations for DollyCorporation.
| Beginning inventory (units) | 0 |
| Units produced (units) | 6,000 |
| Manufacturing costs | |
| Direct labor (per unit) | $5.00 |
| Direct materials (per unit) | $2.30 |
| Variable overhead (per unit) | $2.40 |
Required:
Prepare an absorption costing income statement.
Problem 3:
The following information was compiled for two models of cellphones.
| 3G model | 4G model | Average | |
| Budgeted Contribution Margin | $80.00 | $120.00 | $95.25 |
| Budgeted Sales in Units | 28,000 | 18,000 | |
| Actual Sales in Units | 28,600 | 16,500 |
Required:
Calculate the sales mix variance. (Show your calculations.)
Related questions
Overhead Variances, Four-Variance Analysis
Oerstman, Inc., uses a standard costing system and develops itsoverhead rates from the current annual budget. The budget is basedon an expected annual output of 128,000 units requiring 512,000direct labor hours. (Practical capacity is 532,000 hours.) Annualbudgeted overhead costs total $844,800, of which $604,160 is fixedoverhead. A total of 119,500 units using 510,000 direct labor hourswere produced during the year. Actual variable overhead costs forthe year were $262,000, and actual fixed overhead costs were$555,550.
Required:
1. Compute the fixed overhead spending andvolume variances.
| Fixed Overhead Spending Variance | $ | |
| Fixed Overhead Volume Variance | $ |
2. Compute the variable overhead spending andefficiency variances. Do not round intermediate calculations
| Variable Overhead Spending Variance | $ | |
| Variable Overhead Efficiency Variance | $ |
