*00Exercise 16-46 (Algo) Fixed Cost Variances (LO 16-6)Paynesville Corporation manufactures and sells a preservative used in food and drug manufacturing. The company carries noinventories. The master budget calls for the company to manufacture and sell 104,000 liters at a budgeted price of $105 per liter thisyear. The standard direct cost sheet for one liter of the preservative follows.Direct materialsDirect labor(2 pounds @ $6)(0.5 hours @ $28)$1214Variable overhead is applied based on direct labor hours. The variable overhead rate is $40 per direct-labor hour. The fixed overheadrate (at the master budget level of activity) is $12 per unit. All non-manufacturing costs are fixed and are budgeted at $1.4 million for thecoming year.At the end of the year, the costs analyst reported that the sales activity variance for the year was $354,000 unfavorable.The following is the actual income statement (in thousands of dollars) for the year.Sales revenue$10,498Less variable costsDirect materialsDirect laborVariable overhead1,1681,3101,930$ 4,408Total variable costsContribution marginLess fixed costsFixed manufacturing overheadNon-manufacturing costsTotal fixed costs060 9 $1,3701,250$ 2,620$ 3,470Operating profitRequired:What are the fixed overhead price and production volume variances for Paynesville? (Enter your answers in whole dollars. Indicatethe effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)Fixed overhead price varianceFixed overhead production volume variance< Prev4 of 7Next >+66F4FSF7+ Q$44.%237. ChecProblem 16-72 (Algo) Variance Computations with Missing Data (LO 16-5, 6)The following information is provided to assist you in evaluating the performance of the production operations of Studio Company:Units produced (actual)Master production budgetDirect materialsDirect laborOverheadStandard costs per unitDirect materialsDirect laborVariable overheadActual costsDirect materials purchased and usedDirect labor57,000$127,380108,080167,910$1.65 x 2 gallons per unit of output$14 per hour x 0.2 hour per unit$12.50 per direct labor-hour$150,960 (81,600 gallons)134,231 (9,980 hours)177,200 (61% is variable)OverheadVariable overhead is applied on the basis of direct labor-hours.Required:Calculate all variable production cost price and efficiency variances and fixed production cost price and production volume variances.(Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable.If there is no effect, do not select either option.)Efficiency VarianceProduction VolumeVariancePrice VarianceDirect materialsDirect laborFFVariable overheadFFFixed overheadF

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 104,000 liters at a budgeted price of $105 per liter this year. The standard direct cost sheet for one liter of the preservative follows. Direct materials Direct labor (2 pounds @$6) (0.5 hours @ $28) $12 14 Variable overhead is applied based on direct labor hours. The variable overhead rate is $40 per direct-labor hour. The fixed overhead rate (at the master budget level of activity) is $12 per unit. All non-manufacturing costs are fixed and are budgeted at $1.4 million for the coming year. At the end of the year, the costs analyst reported that the sales activity variance for the year was $354,000 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 104,000 liters at a budgeted price of $105 per liter this year. The standard direct cost sheet for one liter of the preservative follows. Direct materials Direct labor (2 pounds @$6) (0.5 hours @ $28) $12 14 Variable overhead is applied based on direct labor hours. The variable overhead rate is $40 per direct-labor hour. The fixed overhead rate (at the master budget level of activity) is $12 per unit. All non-manufacturing costs are fixed and are budgeted at $1.4 million for the coming year. At the end of the year, the costs analyst reported that the sales activity variance for the year was $354,000 unfavorable.

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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Subject: Acounting