Paynesville Corporation manufactures and sells a preservative used in food and drug manufacturing. The company carries no inventories. The master budget calls for the company to manufacture and sell 132,000 liters at a budgeted price of $315 per liter this year. The standard direct cost sheet for one liter of the preservative follows. Direct materials Direct labor (2 pounds @ $20) (0.5 hours @ $56) $40 28 Variable overhead is applied based on direct labor hours. The variable overhead rate is $180 per direct-labor hour. The fixed overhead rate (at the master budget level of activity) is $90 per unit. All non-manufacturing costs are fixed and are budgeted at $2.8 million for the coming year. At the end of the year, the costs analyst reported that the sales activity variance for the year was $942,000 unfavorable.
Paynesville Corporation manufactures and sells a preservative used in food and drug manufacturing. The company carries no inventories. The master budget calls for the company to manufacture and sell 132,000 liters at a budgeted price of $315 per liter this year. The standard direct cost sheet for one liter of the preservative follows. Direct materials Direct labor (2 pounds @ $20) (0.5 hours @ $56) $40 28 Variable overhead is applied based on direct labor hours. The variable overhead rate is $180 per direct-labor hour. The fixed overhead rate (at the master budget level of activity) is $90 per unit. All non-manufacturing costs are fixed and are budgeted at $2.8 million for the coming year. At the end of the year, the costs analyst reported that the sales activity variance for the year was $942,000 unfavorable.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter8: Budgeting
Section: Chapter Questions
Problem 4CMA: Krouse Company produces two products, forged putter heads and laminated putter heads, which are sold...
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![Paynesville Corporation manufactures and sells a preservative used in food and drug manufacturing. The company carries no
inventories. The master budget calls for the company to manufacture and sell 132,000 liters at a budgeted price of $315 per liter this
year. The standard direct cost sheet for one liter of the preservative follows.
Direct materials
Direct labor
(2 pounds @ $20)
(0.5 hours @ $56)
$40
28
Variable overhead is applied based on direct labor hours. The variable overhead rate is $180 per direct-labor hour. The fixed overhead
rate (at the master budget level of activity) is $90 per unit. All non-manufacturing costs are fixed and are budgeted at $2.8 million for
the coming year.
At the end of the year, the costs analyst reported that the sales activity variance for the year was $942,000 unfavorable.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdead88a2-0ef7-48c9-8d78-426ba1780967%2F48c6bbf4-cf93-48e5-a0b9-569f61e3bf0d%2Fqsnx06_processed.png&w=3840&q=75)
Transcribed Image Text:Paynesville Corporation manufactures and sells a preservative used in food and drug manufacturing. The company carries no
inventories. The master budget calls for the company to manufacture and sell 132,000 liters at a budgeted price of $315 per liter this
year. The standard direct cost sheet for one liter of the preservative follows.
Direct materials
Direct labor
(2 pounds @ $20)
(0.5 hours @ $56)
$40
28
Variable overhead is applied based on direct labor hours. The variable overhead rate is $180 per direct-labor hour. The fixed overhead
rate (at the master budget level of activity) is $90 per unit. All non-manufacturing costs are fixed and are budgeted at $2.8 million for
the coming year.
At the end of the year, the costs analyst reported that the sales activity variance for the year was $942,000 unfavorable.
![Required
Prepare a flexible budget for Paynesville for the year. (Enter your answers in thousands of dollars.)
Sales revenue
Variable costs:
PAYNESVILLE CORPORATION
Flexible Budget
(thousands of dollars)
Materials
Direct labor
Variable overhead
Total variable costs
Fixed costs:
Manufacturing overhead
Non-manufacturing
Total fixed costs
Operating profits
$
$
GA
$
$
CA
0
0
0
0](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdead88a2-0ef7-48c9-8d78-426ba1780967%2F48c6bbf4-cf93-48e5-a0b9-569f61e3bf0d%2Fz77773_processed.png&w=3840&q=75)
Transcribed Image Text:Required
Prepare a flexible budget for Paynesville for the year. (Enter your answers in thousands of dollars.)
Sales revenue
Variable costs:
PAYNESVILLE CORPORATION
Flexible Budget
(thousands of dollars)
Materials
Direct labor
Variable overhead
Total variable costs
Fixed costs:
Manufacturing overhead
Non-manufacturing
Total fixed costs
Operating profits
$
$
GA
$
$
CA
0
0
0
0
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