Lamma Company uses a standard cost system. The static (Master) budget on January 1, 2022 shows that the company is planning to produce and sell 30,000 units of product R at a selling price of $70 per unit. The following information is available on January 1, 2022: Budgeted variable overhead costs $75,000 Budgeted fixed overhead costs $150,000 The standard costs per unit of output are as follows: Direct material: 3 lbs @ $3.50 per lb Direct labor: 1.5 hours @ $20.0 per hour The company actually produced and sold 20,000 units at a price of $90 per unit. The Sales Volume Variance is: $170,000 F $270,000 U $425,000 U $135,000 U
Lamma Company uses a standard cost system. The static (Master) budget on January 1, 2022 shows that the company is planning to produce and sell 30,000 units of product R at a selling price of $70 per unit. The following information is available on January 1, 2022: Budgeted variable overhead costs $75,000 Budgeted fixed overhead costs $150,000 The standard costs per unit of output are as follows: Direct material: 3 lbs @ $3.50 per lb Direct labor: 1.5 hours @ $20.0 per hour The company actually produced and sold 20,000 units at a price of $90 per unit. The Sales Volume Variance is: $170,000 F $270,000 U $425,000 U $135,000 U
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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Transcribed Image Text:Lamma Company uses a standard cost system. The static (Master) budget on January
1, 2022 shows that the company is planning to produce and sell 30,000 units of
product R at a selling price of $70 per unit. The following information is available on
January 1, 2022:
Budgeted variable overhead costs $75,000
Budgeted fixed overhead costs $150,000
The standard costs per unit of output are as follows:
Direct material: 3 lbs @ $3.50 per lb
Direct labor: 1.5 hours @ $20.0 per hour
The company actually produced and sold 20,000 units at a price of $90 per unit.
The Sales Volume Variance is:
$170,000 F
$270,000 U
$425,000 U
$135,000 U
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