7-34. FLEXIBLE BUDGET, DIRECT MATERIALS, AND DIRECTMANUFACTURING LABOR VARIANCES. Emerald Statuarymanufactures bust statues of famous historical figures. All statues are thesame size. Each unit requires the same amount of resources. Thefollowing information is from the static budget for 2020:Expected production and salesExpected selling price per unitTotal fixed costsDirect materialsDirect manufacturing labor7,000 units680Standard quantities, standard prices, and standard unit costs follow fordirect materials and direct manufacturing labor:Standard Quantity10 pounds3.7 hours$$1,400,000Standard Price$ 8 per pound$50 per hourStandard Unit Cost$ 80$185During 2020, actual number of units produced and sold was 4,800, at anaverage selling price of $720. Actual cost of direct materials purchasedand used was $392,700 (66,000 pounds at $5.95 per pound). Actual directmanufacturing labor costs were $878,400 (18,300 actual directmanufacturing labor-hours at $48 per hour). Actual fixed costs were$1,170,000. There were no beginning or ending inventories.Required1. Calculate the sales-volume variance and flexible-budget variancefor operating income.2. Compute price and efficiency variances for direct materials anddirect manufacturing labor.

Variance Analysis can be defined as the process of computing the amount of, and isolating the cause…

Answered: Required 1. Calculate the sales-volume…

Required 1. Calculate the sales-volume variance and flexible-budget variance for operating income. 2. Compute price and efficiency variances for direct materials and direct manufacturing labor.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Question

7-34. FLEXIBLE BUDGET, DIRECT MATERIALS, AND DIRECT
MANUFACTURING LABOR VARIANCES. Emerald Statuary
manufactures bust statues of famous historical figures. All statues are the
same size. Each unit requires the same amount of resources. The
following information is from the static budget for 2020:
Expected production and sales
Expected selling price per unit
Total fixed costs
Direct materials
Direct manufacturing labor
7,000 units
680
Standard quantities, standard prices, and standard unit costs follow for
direct materials and direct manufacturing labor:
Standard Quantity
10 pounds
3.7 hours
$
$1,400,000
Standard Price
$ 8 per pound
$50 per hour
Standard Unit Cost
$ 80
$185
During 2020, actual number of units produced and sold was 4,800, at an
average selling price of $720. Actual cost of direct materials purchased
and used was $392,700 (66,000 pounds at $5.95 per pound). Actual direct
manufacturing labor costs were $878,400 (18,300 actual direct
manufacturing labor-hours at $48 per hour). Actual fixed costs were
$1,170,000. There were no beginning or ending inventories.
Required
1. Calculate the sales-volume variance and flexible-budget variance
for operating income.
2. Compute price and efficiency variances for direct materials and
direct manufacturing labor.

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