Golden Food Products produces special-formula pet food. The company carries no inventories. The master budget calls for the company to manufacture and sell 121,000 cases at a budgeted price of $62 per case this year. The standard direct cost sheet for one case of pet food follows: Direct materials Direct labor Sales revenue Less variable costs 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 $12 per unit. All nonmanufacturing costs are fixed and are budgeted at $2.2 million for the coming year. At the end of the year, the costs analyst reported that the sales activity variance for the year was $352,000 favorable. The following is the actual income statement (in thousands of dollars) for the year for Golden Food Products: $ 7,800 Direct materials Direct labor Variable overhead Total variable costs Contribution margin Less fixed costs Fixed manufacturing overhead Nonmanufacturing costs Total fixed costs (3 pounds @ $2) (0.25 hours @ $32) Operating profit 800 992 515 Fixed overhead price variance Fixed overhead production volume variance $ 2,307 $ 5,493 $6 8 1,490 2,135 $ 3,625 $ 1,868 Required: What are the fixed overhead price and production volume variances for Golden Food Products? Note: 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.
Golden Food Products produces special-formula pet food. The company carries no inventories. The master budget calls for the company to manufacture and sell 121,000 cases at a budgeted price of $62 per case this year. The standard direct cost sheet for one case of pet food follows: Direct materials Direct labor Sales revenue Less variable costs 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 $12 per unit. All nonmanufacturing costs are fixed and are budgeted at $2.2 million for the coming year. At the end of the year, the costs analyst reported that the sales activity variance for the year was $352,000 favorable. The following is the actual income statement (in thousands of dollars) for the year for Golden Food Products: $ 7,800 Direct materials Direct labor Variable overhead Total variable costs Contribution margin Less fixed costs Fixed manufacturing overhead Nonmanufacturing costs Total fixed costs (3 pounds @ $2) (0.25 hours @ $32) Operating profit 800 992 515 Fixed overhead price variance Fixed overhead production volume variance $ 2,307 $ 5,493 $6 8 1,490 2,135 $ 3,625 $ 1,868 Required: What are the fixed overhead price and production volume variances for Golden Food Products? Note: 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please do not give solution in image format thanku
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 121,000 cases at a budgeted price of $62 per case this year. The standard direct cost sheet for one
case of pet food follows:
Direct materials.
Direct labor
Sales revenue
Less variable costs
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 $12 per unit. All nonmanufacturing costs are fixed and are budgeted at $2.2 million for the
coming year.
At the end of the year, the costs analyst reported that the sales activity variance for the year was $352,000 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
(3 pounds @ $2)
(0.25 hours @ $32)
Operating profit
$ 7,800
Fixed overhead price variance
Fixed overhead production volume variance
800
992
515
$ 2,307
$ 5,493
$6
8
1,490
2,135
$ 3,625
$ 1,868
Required:
What are the fixed overhead price and production volume variances for Golden Food Products?
Note: 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.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 4 images
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education