Is 2.5 m 0.6 DLH $6.50 per metre $16.75 per labour hour used to allocate both variable overheads and fixed overheads. Ead hours. The budgeted variable overhead costs are $1.170.000 while
Is 2.5 m 0.6 DLH $6.50 per metre $16.75 per labour hour used to allocate both variable overheads and fixed overheads. Ead hours. The budgeted variable overhead costs are $1.170.000 while
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:Accounting
Simple Jeans is preparing its budget for the next 12 months and uses zero-based budgeting. The
budgeted sales price is $44.90 per unit and the budgeted volume of production and sales for the next
12 month period is 100,000 units. The material and labour requirements to produce one pair of jeans
are as follows:
Direct Materials.
Direct Labour
Machine hours are used to allocate both variable overheads and fixed overheads. Each pair of jeans
uses 0.35 machine hours. The budgeted variable overhead costs are $1,170,000 while the budgeted
fixed overhead costs are $356,200 for the year.
2.5 m
$6.50 per metre
0.6 DLH $16.75 per labour hour
You are later provided with the following detailed actual results and actual costs for the year.
Actual
$4,249,000
Sales Revenue
Direct Materials
Direct Labour
Variable Overhead
Total Variable Costs
Contribution
Fixed Overhead Costs
Net Profit
$1,548,450
$953,100
$1,069,375
$3,570,925
$678,075
$358,600
$319,475
90,000 units
225,900 m
56,990 DLH
32,690 MH
1) Calculate the sales volume variance for sales
revenue for Simple Jeans.
2) Calculate the sales volume variance for total
variable costs for Simple Jeans.
3) Calculate the flexible budget variance for
sales revenue for Simple Jeans.
4) Calculate the flexible budget variance for
direct materials for Simple Jeans.
Give your answer in 2 decimal places and in
absolute dollar value (negative not required).
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