Golden Food Products produces special-formula pet food. The company carries no Inventories. The master budget calls for the company to manufacture and sell 126,500 cases at a budgeted price of $60 per case this year. The standard direct cost sheet for one case of pet food follows: Direct materials Direct labor Variable overhead is applied based on direct labor-hours. The variable overhead rate is $16 per direct labor-hour. The fixed overhead rate (at the master budget level of activity) is $10 per unit. All nonmanufacturing costs are fixed and are budgeted at $2.2 million for the coming year Sales revenue Less variable costs At the end of the year, the costs analyst reported that the sales activity variance for the year was $336,000 favorable. The following is the actual income statement (in thousands of dollars) for the year for Golden Food Products: Direct materials Direct labor Variable overhead Total variable costs Contribution margin. Less fixed costs Fixed manufacturing overhead Nonnanufacturing costs Total fixed costs Operating profit (3 pounds @ $2) (0.25 hours @ $32) a. Direct materials Price variance Efficiency vanance b. Direct labor Price vanance Efficiency variance e Variable overhead Price variance Efficiency variance $ 14,300 826 1,018 541 During the year, the company purchased 326,500 pounds of material and employed 34,320 hours of direct labor. Required: a. Compute the direct materials price and efficiency variances. b. Compute the direct labor price and efficiency variances c. Compute the variable overhead price and efficiency variances Note: For all requirements, enter your answers in whole dollars. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. 56 8 $2,385 $ 11,915 2,005 2,138 $ 4,223 $ 7,692
Golden Food Products produces special-formula pet food. The company carries no Inventories. The master budget calls for the company to manufacture and sell 126,500 cases at a budgeted price of $60 per case this year. The standard direct cost sheet for one case of pet food follows: Direct materials Direct labor Variable overhead is applied based on direct labor-hours. The variable overhead rate is $16 per direct labor-hour. The fixed overhead rate (at the master budget level of activity) is $10 per unit. All nonmanufacturing costs are fixed and are budgeted at $2.2 million for the coming year Sales revenue Less variable costs At the end of the year, the costs analyst reported that the sales activity variance for the year was $336,000 favorable. The following is the actual income statement (in thousands of dollars) for the year for Golden Food Products: Direct materials Direct labor Variable overhead Total variable costs Contribution margin. Less fixed costs Fixed manufacturing overhead Nonnanufacturing costs Total fixed costs Operating profit (3 pounds @ $2) (0.25 hours @ $32) a. Direct materials Price variance Efficiency vanance b. Direct labor Price vanance Efficiency variance e Variable overhead Price variance Efficiency variance $ 14,300 826 1,018 541 During the year, the company purchased 326,500 pounds of material and employed 34,320 hours of direct labor. Required: a. Compute the direct materials price and efficiency variances. b. Compute the direct labor price and efficiency variances c. Compute the variable overhead price and efficiency variances Note: For all requirements, enter your answers in whole dollars. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. 56 8 $2,385 $ 11,915 2,005 2,138 $ 4,223 $ 7,692
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
H1.
Transcribed Image Text:Golden Food Products produces special-formula pet food. The company carries no Inventories. The master budget calls for the
company to manufacture and sell 126,500 cases at a budgeted price of $60 per case this year. The standard direct cost sheet for one
case of pet food follows:
Direct materials
Direct labor
Variable overhead is applied based on direct labor-hours. The variable overhead rate is $16 per direct labor-hour. The fixed overhead
rate (at the master budget level of activity) is $10 per unit. All nonmanufacturing costs are fixed and are budgeted at $2.2 million for the
coming year
Sales revenue
Less variable costs
At the end of the year, the costs analyst reported that the sales activity variance for the year was $336,000 favorable.
The following is the actual income statement (in thousands of dollars) for the year for Golden Food Products:
Direct materials
Direct labor
Variable overhead
Total variable costs
Contribution margin
Less fixed costs
Fixed manufacturing overhead
Nonmanufacturing costs
Total fixed costs
Operating profit
a. Direct materials:
Price variance
(3 pounds @ $2)
(0.25 hours @ $32)
Efficiency variance
b. Direct labor
Price vanance
During the year, the company purchased 326,500 pounds of material and employed 34,320 hours of direct labor.
Required:
a. Compute the direct materials price and efficiency varlances.
b. Compute the direct labor price and efficiency variances.
c. Compute the variable overhead price and efficiency variances
Note: For all requirements, enter your answers in whole dollars. Indicate the effect of each variance by selecting "F" for
favorable, or "U" for unfavorable. If there is no effect, do not select either option.
Efficiency variance
e Variable overhead
Price variance
Efficiency variance
$ 14,300
826
1,018
541
$6
$2,385
$ 11,915
2,085
2,138
$4,223
$ 7,692
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