Calculate the sales-volume variance and flexible-budget variance for operating income. 2. Compute price and efficiency variances for direct materials and direct manufacturing labor
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Palermo Statuary manufactures bust statues of famous historical figures. All statues are the same size. Each unit requires the same amount of resources. The following information is from the static budget for 2020 .
| Expected production and sales | 6,100 units |
|---|---|
| Expected selling price per unit | $755 |
| Total fixed costs | $1,600,000 |
Standard quantities, standard prices, and standard unit costs follow for direct materials and direct manufacturing labor.
Data table
| Standard Quantity | Standard Price | ||
| Direct materials | 16 pounds | $14 per pound | $224 |
| Direct manufacturing labor | 3.8 hours | $30 per hour | $114 |
During 2020, actual number of units produced and sold was 5,100, at an average selling price of $790.Actual cost of direct materials used was $1,149,400 (70,000 pounds at $16.42 per pound). Actual direct
Requirements
| 1. | Calculate the sales-volume variance and flexible- |
| 2. | Compute price and efficiency variances for direct materials and direct manufacturing labor |
1)
| Actual Results | Flexible Budget Variance | Flexible Budget | Sales Volume Variance | Static Budget | |||
| Output Units | 5,100.00 | 5,100.00 | 6,100.00 | ||||
| Revenue | 4,029,000.00 | 178,500.00 | F | 3,850,500.00 | 755,000.00 | U | 4,605,500.00 |
| Direct Materials | 1,149,400.00 | 7,000.00 | U | 1,142,400.00 | 224,000.00 | F | 1,366,400.00 |
| Direct Manufacturing Labor | 572,900.00 | 8,500.00 | F | 581,400.00 | 114,000.00 | F | 695,400.00 |
| Fixed Costs | 1,240,000.00 | 360,000.00 | F | 1,600,000.00 | - | NONE | 1,600,000.00 |
| Total Costs | 2,962,300.00 | 361,500.00 | F | 3,323,800.00 | 338,000.00 | F | 3,661,800.00 |
| Operating Income | 1,066,700.00 | 540,000.00 | F | 526,700.00 | 417,000.00 | U | 943,700.00 |
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