Budget (25,000 units) Actual (27,000 units) Selling price $5.00 per unit $141,210 Varlable costs (per unit) Direct materlals 1.24 per unit $30,800 Direct labor... 1.50 per unit 37,800 Factory supplies 0.25 per unit 9,990 Utilities 0.50 per unit 16,200 Selling costs. 0.40 per unit 9,180 Fixed costs (per month) Depreciation-Machinery". $3,750 $3,710 Depreciation-Factory bullding General liability Insurance.. 2,500 2,500 1,200 1,250 Property taxes on office equipment. Other administrative expense.. 500 485 750 900 *Indicates factory overhead ie m; $0.75 per unit or $3 per direct labor hour for variable overhead, and $0.25 per unit or $1 per direct labor hour for fixed overhead. Standard costs based on expected output of 25,000 units. Standard Total Quantity Cost Direct materlals, 4 oz. per unit e $0.31 per oz. 100,000 oz. $31,000 Direct labor, 0.25 hr. per unit e $6.00 per hr. 6,250 hrs. 37,500 Overhead, 6,250 standard hours x $4.00 per DLH. 25,000 Actual costs incurred to produce 27,000 units. Actual Total Quantity Cost Direct materlals, 110,000 oz. e $0.28 per oz.. 110,000 oz. $30,800 Direct labor, 5,400 hrs. e $7.00 per hr. 5,400 hrs. 37,800 Overhead ($9,990 + $16,200 + $3,710 + $2,500) 32,400 Required 1. Prepare June flexible budgets showing ex pected sales, costs, and net income assuming 20,000, 25,000, and 30,000 units of output produced and sold. 2. Prepare a flexible budget performance report that compares actual results with the amounts budgeted if the actual volume of 27,000 units had been expected. 3. Apply variance analysis for direct materials and direct labor. 4. Compute the total overhead variance and the overhead controllable and overhead volume variances. 5. Compute spending and efficiency variances for overhead. (Refer to Appendix 23A.) 6. Prepare journal entries to record standard costs, and price and quantity variances, for direct materials, direct labor, and factory overhead. (Refer to Appendix 23A.)
Budget (25,000 units) Actual (27,000 units) Selling price $5.00 per unit $141,210 Varlable costs (per unit) Direct materlals 1.24 per unit $30,800 Direct labor... 1.50 per unit 37,800 Factory supplies 0.25 per unit 9,990 Utilities 0.50 per unit 16,200 Selling costs. 0.40 per unit 9,180 Fixed costs (per month) Depreciation-Machinery". $3,750 $3,710 Depreciation-Factory bullding General liability Insurance.. 2,500 2,500 1,200 1,250 Property taxes on office equipment. Other administrative expense.. 500 485 750 900 *Indicates factory overhead ie m; $0.75 per unit or $3 per direct labor hour for variable overhead, and $0.25 per unit or $1 per direct labor hour for fixed overhead. Standard costs based on expected output of 25,000 units. Standard Total Quantity Cost Direct materlals, 4 oz. per unit e $0.31 per oz. 100,000 oz. $31,000 Direct labor, 0.25 hr. per unit e $6.00 per hr. 6,250 hrs. 37,500 Overhead, 6,250 standard hours x $4.00 per DLH. 25,000 Actual costs incurred to produce 27,000 units. Actual Total Quantity Cost Direct materlals, 110,000 oz. e $0.28 per oz.. 110,000 oz. $30,800 Direct labor, 5,400 hrs. e $7.00 per hr. 5,400 hrs. 37,800 Overhead ($9,990 + $16,200 + $3,710 + $2,500) 32,400 Required 1. Prepare June flexible budgets showing ex pected sales, costs, and net income assuming 20,000, 25,000, and 30,000 units of output produced and sold. 2. Prepare a flexible budget performance report that compares actual results with the amounts budgeted if the actual volume of 27,000 units had been expected. 3. Apply variance analysis for direct materials and direct labor. 4. Compute the total overhead variance and the overhead controllable and overhead volume variances. 5. Compute spending and efficiency variances for overhead. (Refer to Appendix 23A.) 6. Prepare journal entries to record standard costs, and price and quantity variances, for direct materials, direct labor, and factory overhead. (Refer to Appendix 23A.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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
Pacific Company provides the following information about its budgeted and actual results for June 2019. Although the expected June volume was 25,000 units produced and sold, the company actually produced and sold 27,000 units, as detailed here.
Transcribed Image Text:Budget
(25,000 units)
Actual
(27,000 units)
Selling price
$5.00 per unit
$141,210
Varlable costs (per unit)
Direct materlals
1.24 per unit
$30,800
Direct labor...
1.50 per unit
37,800
Factory supplies
0.25 per unit
9,990
Utilities
0.50 per unit
16,200
Selling costs.
0.40 per unit
9,180
Fixed costs (per month)
Depreciation-Machinery".
$3,750
$3,710
Depreciation-Factory bullding
General liability Insurance..
2,500
2,500
1,200
1,250
Property taxes on office equipment.
Other administrative expense..
500
485
750
900
*Indicates factory overhead ie m; $0.75 per unit or $3 per direct labor hour for variable overhead, and $0.25
per unit or $1 per direct labor hour for fixed overhead.
Standard costs based on expected output of 25,000 units.
Standard
Total
Quantity
Cost
Direct materlals, 4 oz. per unit e $0.31 per oz.
100,000 oz.
$31,000
Direct labor, 0.25 hr. per unit e $6.00 per hr.
6,250 hrs.
37,500
Overhead, 6,250 standard hours x $4.00 per DLH.
25,000
Actual costs incurred to produce 27,000 units.
Actual
Total
Quantity
Cost
Direct materlals, 110,000 oz. e $0.28 per oz..
110,000 oz.
$30,800
Direct labor, 5,400 hrs. e $7.00 per hr.
5,400 hrs.
37,800
Overhead ($9,990 + $16,200 + $3,710 + $2,500)
32,400
Transcribed Image Text:Required
1. Prepare June flexible budgets showing ex pected sales, costs, and net income assuming 20,000, 25,000,
and 30,000 units of output produced and sold.
2. Prepare a flexible budget performance report that compares actual results with the amounts budgeted
if the actual volume of 27,000 units had been expected.
3. Apply variance analysis for direct materials and direct labor.
4. Compute the total overhead variance and the overhead controllable and overhead volume variances.
5. Compute spending and efficiency variances for overhead. (Refer to Appendix 23A.)
6. Prepare journal entries to record standard costs, and price and quantity variances, for direct materials,
direct labor, and factory overhead. (Refer to Appendix 23A.)
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