1. The following data is given for the Stringer Company: Budgeted production 26,000 units Actual production 27,500 units Materials: Standard price per ounce $6.50 Standard ounces per completed unit 8 Actual ounces purchased and used in production 228,000 Actual price paid for materials $1,504,800 Labor: Standard hourly labor rate $22 per hour Standard hours allowed per completed unit 6.6 Actual labor hours worked 183,000 Actual total labor costs $4,020,000 Overhead: Actual and budgeted fixed overhead $1,029,600 Standard variable overhead rate $24.50 per standard labor hour Actual variable overhead costs $4,520,000 Overhead is applied on standard labor hours. The direct materials price variance is a. $22,800 favorable b. $52,000 unfavorable c. $52,000 favorable d. $22,800 unfavorable
1. The following data is given for the Stringer Company: Budgeted production 26,000 units Actual production 27,500 units Materials: Standard price per ounce $6.50 Standard ounces per completed unit 8 Actual ounces purchased and used in production 228,000 Actual price paid for materials $1,504,800 Labor: Standard hourly labor rate $22 per hour Standard hours allowed per completed unit 6.6 Actual labor hours worked 183,000 Actual total labor costs $4,020,000 Overhead: Actual and budgeted fixed overhead $1,029,600 Standard variable overhead rate $24.50 per standard labor hour Actual variable overhead costs $4,520,000 Overhead is applied on standard labor hours. The direct materials price variance is a. $22,800 favorable b. $52,000 unfavorable c. $52,000 favorable d. $22,800 unfavorable
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
1. The following data is given for the Stringer Company:
Overhead is applied on standard labor hours.
The direct materials price variance is
| Budgeted production | 26,000 units |
| Actual production | 27,500 units |
| Materials: | |
| Standard price per ounce | $6.50 |
| Standard ounces per completed unit | 8 |
| Actual ounces purchased and used in production | 228,000 |
| Actual price paid for materials | $1,504,800 |
| Labor: | |
| Standard hourly labor rate | $22 per hour |
| Standard hours allowed per completed unit | 6.6 |
| Actual labor hours worked | 183,000 |
| Actual total labor costs | $4,020,000 |
| Actual and budgeted fixed overhead | $1,029,600 |
| Standard variable overhead rate | $24.50 per standard labor hour |
| Actual variable overhead costs | $4,520,000 |
Overhead is applied on standard labor hours.
The direct materials price variance is
a. $22,800 favorable
b. $52,000 unfavorable
c. $52,000 favorable
d. $22,800 unfavorable
2. The following financial information was summarized from the accounting records of Train Corporation for the current year ended December 31:
The net income for Train Corporation is
| Rails Division |
Locomotive Division |
Corporate Total |
||||
| Cost of goods sold | $ 47,200 | $30,720 | ||||
| Direct operating expenses | 27,200 | 20,040 | ||||
| Sales | 108,000 | 78,000 | ||||
| Interest expense | $ 2,040 | |||||
| General overhead | 18,160 | |||||
| Income tax | 4,700 |
The net income for Train Corporation is
a. $48,390
b. $83,180
c. $35,940
d. $60,840
3. To calculate income from operations, total service department charges are
a. subtracted from operating expenses
b. subtracted from income from operations before service department charges
c. subtracted from gross profit margin
d. added to income from operations before service department charges
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