Paynesville Corporation manufactures and sells apreservative used in food and drug manufacturing. Thecompany carries no inventories. The master budgetcalls for the company to manufacture and sell 134,000liters at a budgeted price of $330 per liter this year.The standard direct cost sheet for one liter of thepreservative follows.Direct materialsDirect labor(2 pounds @ $21)(0.5 hours @ $58)$4229Variable overhead is applied based on direct laborhours. The variable overhead rate is $190 per direct-labor hour. The fixed overhead rate (at the masterbudget level of activity) is $95 per unit. All non-manufacturing costs are fixed and are budgeted at$2.9 million for the coming year.At the end of the year, the costs analyst reported thatthe sales activity variance for the year was $984,000unfavorable.The following is the actual income statement (inthousands of dollars) for the year.Sales revenueLess variable costs.Direct materials.Direct laborVariable overheadTotal variable costsContribution marginLess fixed costs.Fixed manufacturing overheadNon-manufacturing costs< Prev3 of 5*******O|||Next >$42,5984,4681,1801,100$ 6,748$35,8501,2201,400 SavedSales revenue$42,598Less variable costsDirect materialsDirect labor4,4681,180Variable overhead1,100Total variable costs.$6,748Contribution margin$35,850Less fixed costs1,220Fixed manufacturing overheadNon-manufacturing costs1,400Total fixed costs$ 2,620Operating profit$33,230Required:Prepare a profit variance analysis. (Enter your answersin thousands of dollars. Indicate the effect of eachvariance by selecting "F" for favorable, or "U" forunfavorable. If there is no effect, do not select eitheroption.)ActualSales revenueMaterialsDirect laborVariable overheadTotal variable costsContribution marginFixed costs:apter 16 As...ManufacturingNon-manufacturinglelpSave & Exit SubmitCheck my work42,5984,4681,1801,1006,748$ 35,8501,220$

Profit Variance analysis- Gross profit analysis is determining the reasons for the change in gross…

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 134,000 liters at a budgeted price of $330 per liter this year. The standard direct cost sheet for one liter of the preservative follows. Direct materials (2 pounds @ $21) $42

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 134,000 liters at a budgeted price of $330 per liter this year. The standard direct cost sheet for one liter of the preservative follows. Direct materials (2 pounds @ $21) $42

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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am. 118.
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