Donaldson Corporation is a manufacturer of computer accessories. It uses absorption costing based on standard costs and reports the following data for 2014:(Click the icon to view the data.)There are no price, spending, or efficiency variances. Actual operating costs equal budgeted operating costs. The production-volume variance is written off to cost of goods sold. For each choice of denominatorlevel, the budgeted production cost per unit is also the cost per unit of beginning inventory.- XData TableTheoretical capacityPractical capacityNormal capacity utilizationSelling priceBeginning inventoryProductionLess:PrintDifference in operating income$Sales volumeVariable budgeted manufacturing cost$Total budgeted fixed manufacturing costs$ 2,915,000Total budgeted operating (non-manuf.) costs (all fixed) $ 200,000Done275,000 units265,000 units233,200 units39 per unitLess:35,000 units235,000 units250,000 unitsRequirement 3. Why is the operating income under normal capacity utilization lower than the other two scenarios?During 2014 Donaldson hadin inventory levels. Theallocated to each unit of production, and, when those units arecapacity of the three, hence in this year, when production wassold, theNormal utilization capacity is thesales, the absorption-costing based operating income is the smallest when normal capacity utilization is used as the denominator level.Requirement 4. Reconcile the difference in operating income based on theoretical capacity and practical capacity with the difference in fixed manufacturing overhead included in inventory. (Abbreviation used:Mfg. = Manufacturing.)8 per unitance as favorable (F) or unfavorable (U).Multiply by:= Difference in fixed mfg overhead included in inventorythan

During 2014 Donaldson had a drop of 15,000 units in inventory levels. The smaller the denominator…

e icon to view the data.) price, spending, or efficiency variances. Actual operating costs equal budgeted operating costs. The production-volume vari dgeted production cost per unit is also the cost per unit of beginning inventory. - X ita Table etical capacity cal capacity al capacity utilization price ning inventory ction volume le budgeted manufacturing cost budgeted fixed manufacturing costs $ 275,000 units 265,000 units 233,200 units 39 per unit 35,000 units 235,000 units 250,000 units $ $ 2,915,000 8 per unit ance as favorable (F) or unfavorable (U).

e icon to view the data.) price, spending, or efficiency variances. Actual operating costs equal budgeted operating costs. The production-volume vari dgeted production cost per unit is also the cost per unit of beginning inventory. - X ita Table etical capacity cal capacity al capacity utilization price ning inventory ction volume le budgeted manufacturing cost budgeted fixed manufacturing costs $ 275,000 units 265,000 units 233,200 units 39 per unit 35,000 units 235,000 units 250,000 units $ $ 2,915,000 8 per unit ance as favorable (F) or unfavorable (U).

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Can't figure out sales volume variance, please show work.
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Marla Baldwin was a blt anxlous as she created the year-end performance reports. She remembered how management had hoped the economy would make a favorable turn, taking pressure off consumers so they'd feel more comfortable spending on the company's splurge Item-a luxurious hooded cotton robe. Alas, actual production and sales ended at 5,100 units, a whopping 1,000 units shy of the company's original budget. The following Information presents the company's actual Income statement and other key Information for Marla. Sales Varlable costs: DM Actual Income DL Varlable-MOH Contribution margin Fixed costs: Fixed-MOH Fixed SG&A Operating Income Standards are as follows. Direct materials Direct labor Variable-MOH Fixed-MOH $800,700 Selling price Fixed SGSA expense 172,125 (for 11,475 yards purchased and used) 75,276 (for 3,672 hours used) 45,900 O Search 507,399 170,978 243,100 Standard Quantity per Unit 2.30 yards 0.70 DL hours $93.321 Additional master budget Information: 2.30 yards 2.30…
Subject: accounting
Benson Company has provided the following Year 2 data. Budget Sales Variable product costs Variable selling expense Other variable expenses Fixed product costs Fixed selling expense Other fixed expenses Interest expense Variances Sales Variable product costs Variable selling expense Other variable expenses Fixed product costs Fixed selling expense Other fixed expenses Interest expense BENSON COMPANY Internal Income Statement for Year 2 Budget Required Prepare a budgeted and actual Income statement for Internal use. Sales Variable expenses: Product costs $504,000 186,000 46,000 3,300 16,500 23,400 1,900 700 Selling expenses Other expenses Contribution margin Fixed expenses: Product costs Selling expenses Other expenses Operating income (loss) Interest expense Net income (loss) 8,600 Unfavorable 4,200 Favorable 2,300 Unfavorable 1,700 Unfavorable 310 Favorable 490 Favorable 190 Unfavorable 90 Favorable Actual
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Jordan Company nas provided the following year data. Budget Sales Variable product costs Variable selling expense Other variable expenses Fixed product costs Fixed selling expense Other fixed expenses Interest expense Variances Sales Variable product costs. Variable selling expense Other variable expenses Fixed product costs Fixed selling expense Other fixed expenses Interest expense JORDAN COMPANY Internal Income Statement for Year 2 Budget Sales Variable expenses: Product costs Selling expenses Other expenses Contribution margin $ 519,000 202,000 Required Prepare a budgeted and actual income statement for Internal use. Fixed expenses: Product costs Selling expenses Other expenses Operating income (loss) Interest expense Net income (loss) 49,000 3,200 16,000 24,000 1,400 688 8,200 Unfavorable 5,000 Favorable 2,200 Unfavorable 1,100 Unfavorable 290 Favorable 460 Favorable 140 Unfavorable 100 Favorable Actual