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Oriole Company's actual results reveal that it was profitable in the sale of its star product: a high-end spot-cleaning vacuum for upholstery. But it was not nearly as profitable as management had hoped. Oriole's actual income statement and master budget income statement are as follows. In order to keep the focus on product costs, SG&A costs were omitted. Units sold Revenues Variable costs DM DL Variable-MOH Contribution margin Fixed-MOH Operating income DM DL Input Variable-MOH Fixed-MOH (a) Here are the company's standard cost cards for each product cost. Units sold Revenues Variable costs DM DL Variable-MOH Actual Results Flexible Budget Master Budget 10,000 $1,670,000 Contribution margin Fixed-MOH ✓ Your answer is correct. Operating income 560,500 216,000 130,500 763,000 Quantity Standards 3.0 yards 306,000 $457,000 1.6 hours $ 16 hours $ 16 hours Price Standards Prepare a flexible budget for Oriole Company so management can evaluate the company's actual performance using a more appropriate benchmark. $18.00 per yard $11.00 per hour $7.50 per hour $15.50 per hour Flexible Budget 10,000 1,730,000 540,000 176.000 120,000 894.000 297,600 12,000 596,400 $2,076,000 648,000 211,200 144.000 1,072,800 297,600 $775,200 Standard Cost per Unit $54.00 $17.60 $12.00 $24.80

Oriole Company's actual results reveal that it was profitable in the sale of its star product: a high-end spot-cleaning vacuum for upholstery. But it was not nearly as profitable as management had hoped. Oriole's actual income statement and master budget income statement are as follows. In order to keep the focus on product costs, SG&A costs were omitted. Units sold Revenues Variable costs DM DL Variable-MOH Contribution margin Fixed-MOH Operating income DM DL Input Variable-MOH Fixed-MOH (a) Here are the company's standard cost cards for each product cost. Units sold Revenues Variable costs DM DL Variable-MOH Actual Results Flexible Budget Master Budget 10,000 $1,670,000 Contribution margin Fixed-MOH ✓ Your answer is correct. Operating income 560,500 216,000 130,500 763,000 Quantity Standards 3.0 yards 306,000 $457,000 1.6 hours $ 16 hours $ 16 hours Price Standards Prepare a flexible budget for Oriole Company so management can evaluate the company's actual performance using a more appropriate benchmark. $18.00 per yard $11.00 per hour $7.50 per hour $15.50 per hour Flexible Budget 10,000 1,730,000 540,000 176.000 120,000 894.000 297,600 12,000 596,400 $2,076,000 648,000 211,200 144.000 1,072,800 297,600 $775,200 Standard Cost per Unit $54.00 $17.60 $12.00 $24.80

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter7: Variable Costing For Management analysis
Section: Chapter Questions
Problem 7E: The following data were adapted from a recent income statement of The Procter Gamble Company (PG):...
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Determine Oriole's flexible budget variances and sales activity variances. Units sold Revenues Variable costs DM DL Variable- MOH Contribution margin Fixed-MOH Operating income Actual Results 10,000 $1,670,000 560,500 216,000 130,500 763,000 306,000 $ $457,000 $ 1 Flexible Budget Variances Flexible Budget 10,000 $1,730,000 540,000 176,000 120,000 894,000 297,600 $596,400
Transcribed Image Text:Determine Oriole's flexible budget variances and sales activity variances. Units sold Revenues Variable costs DM DL Variable- MOH Contribution margin Fixed-MOH Operating income Actual Results 10,000 $1,670,000 560,500 216,000 130,500 763,000 306,000 $ $457,000 $ 1 Flexible Budget Variances Flexible Budget 10,000 $1,730,000 540,000 176,000 120,000 894,000 297,600 $596,400
Oriole Company's actual results reveal that it was profitable in the sale of its star product: a high-end spot-cleaning vacuum for upholstery. But it was not nearly as profitable as management had hoped. Oriole's actual income statement and master budget income statement are as follows. In order to keep the focus on product costs, SG&A costs were omitted. Units sold Revenues Variable costs DM DL Variable-MOH Contribution margin Fixed-MOH Operating income DM DL Input Variable-MOH Fixed-MOHI (a) Here are the company's standard cost cards for each product cost. Units sold Revenues Variable costs DM DL Variable-MOH Actual Results 10,000 $1,670,000 Contribution margin Fixed-MOH 560,500 Operating income 216,000 130,500 763,000 Your answer is correct. 306,000 Quantity Standards 3.0 yards $457,000 $ 1.6 hours Prepare a flexible budget for Oriole Company so management can evaluate the company's actual performance using a more appropriate benchmark. 1.6 hours 1.6 hours Flexible Budget Master Budget 12,000 $2,076,000 Price Standards $18.00 per yard $11.00 per hour $7.50 per hour $15.50 per hour Flexible Budget 10,000 1,730,000 540,000 176,000 120,000 894,000 297,600 648,000 211,200 144,000 596,400 1,072,800 297,600 $775,200 Standard Cost per Unit $54.00 $17.60 $12.00 $24.80
Transcribed Image Text:Oriole Company's actual results reveal that it was profitable in the sale of its star product: a high-end spot-cleaning vacuum for upholstery. But it was not nearly as profitable as management had hoped. Oriole's actual income statement and master budget income statement are as follows. In order to keep the focus on product costs, SG&A costs were omitted. Units sold Revenues Variable costs DM DL Variable-MOH Contribution margin Fixed-MOH Operating income DM DL Input Variable-MOH Fixed-MOHI (a) Here are the company's standard cost cards for each product cost. Units sold Revenues Variable costs DM DL Variable-MOH Actual Results 10,000 $1,670,000 Contribution margin Fixed-MOH 560,500 Operating income 216,000 130,500 763,000 Your answer is correct. 306,000 Quantity Standards 3.0 yards $457,000 $ 1.6 hours Prepare a flexible budget for Oriole Company so management can evaluate the company's actual performance using a more appropriate benchmark. 1.6 hours 1.6 hours Flexible Budget Master Budget 12,000 $2,076,000 Price Standards $18.00 per yard $11.00 per hour $7.50 per hour $15.50 per hour Flexible Budget 10,000 1,730,000 540,000 176,000 120,000 894,000 297,600 648,000 211,200 144,000 596,400 1,072,800 297,600 $775,200 Standard Cost per Unit $54.00 $17.60 $12.00 $24.80
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