Flexible budget, direct materials, and direct manufacturing labor variances. Emerald 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 2017: Expected production and sales 7000 units Expected selling price per unit $680 Total fixed costs $1,400,000 Standard quantities, standard prices, and standard unit costs follow for direct materials and direct manufacturing labor: Standard Quantity Standard Price Standrad Unit Cost Direct Materials 10 Pounds $8 per pound $80.00 Direct Manufacturing Labor 3.7 Hours $50.00 $185.00 During 2017, actual number of units produced and sold was 4,800, at an average selling price of $720. Actual cost of direct materials used was $392,700, based on 66,000 pounds purchased at $5.95 per pound. Direct manufacturing labor-hours actually used were 18,300, at the rate of $48 per hour. As a result, actual direct manufacturing labor costs were $878,400. Actual fixed costs were $1,170,000. There were no beginning or ending inventories. 1. 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.
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.
Flexible budget, direct materials, and direct manufacturing labor variances. Emerald 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 2017:
Expected production and sales 7000 units
Expected selling price per unit $680
Total fixed costs $1,400,000
Standard quantities, standard prices, and standard unit costs follow for direct materials and direct manufacturing labor:
Standard Quantity Standard Price Standrad Unit Cost
Direct Materials 10 Pounds $8 per pound $80.00
Direct Manufacturing Labor 3.7 Hours $50.00 $185.00
During 2017, actual number of units produced and sold was 4,800, at an average selling price of $720. Actual cost of direct materials used was $392,700, based on 66,000 pounds purchased at $5.95 per pound. Direct manufacturing labor-hours actually used were 18,300, at the rate of $48 per hour. As a result, actual direct
1. Calculate the sales-volume variance and flexible-
2. Compute price and efficiency variances for direct materials and direct manufacturing labor.
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