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 labour.
Flexible budget, direct materials, and direct manufacturing labour 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 2021:
| Expected production and sales Expected selling price per unit Total fixed costs |
7,000 units $ 680 $1,400,000 |
Standard quantities, standard prices, and standard unit costs follow for direct materials and direct manufacturing labour:
Standard Quantity Standard Price Standard Unit Cost
Standard quantity Standard price Standard unit cost
| Direct materials Direct manufacturing labour |
10 kilograms 3.7 hours |
$ 8 per kilogram $50 per hour |
$ 80 $185 |
During 2021, actual number of units produced and sold was 4,800, at an average selling price of $720. Actual
cost of direct materials used was $392,700, based on 66,000 kilograms purchased at $5.95 per kilogram.
Direct manufacturing labour-hours actually used were 18,300, at the rate of $48 per hour. As a result, actual
direct
Required
1. Calculate the sales-volume variance and flexible-
2. Compute price and efficiency variances for direct materials and direct manufacturing labour.
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