The following events took place at Unified Containers Inc. during the month of December: Produced and sold 50,000 plastic water containers at a sales price of P10 each. (Budgeted sales were 45000 units at P10.15). Standard variable cost per unit: Direct Materials: 2 lbs at P1 P2.00 Direct Labor: 0.10 hours at P15 1.50 Variable manufacturing overhead: 0.10 hours at P5 0.50 ------------- P4.00 per unit === Fixed manufacturing overhead cost: Monthly budget P80,000 Actual production costs: Direct materials purchased: 200000 lbs at P1.20 P240,000 Direct materials used: 110000 lbs at P1.20 132,000 Direct labor: 6000 hours at P14 84,000 Variable overhead 28,000 Fixed overhead 83,000 Required: Compute the direct materials, labor and variable manufacturing overhead price and efficiency variances. Indicate whether the variance is favorable or unfavorable. Label all answers properly with complete solution.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
The following events took place at Unified Containers Inc. during the month of December:
- Produced and sold 50,000 plastic water containers at a sales price of P10 each. (Budgeted sales were 45000 units at P10.15).
Standard variable cost per unit:
Direct Materials: 2 lbs at P1 P2.00
Direct Labor: 0.10 hours at P15 1.50
Variable manufacturingoverhead : 0.10 hours at P5 0.50
-------------
P4.00 per unit
===
- Fixed
manufacturing overhead cost:
Monthly budget
P80,000 - Actual production costs:
Direct materials purchased: 200000 lbs at P1.20 P240,000
Direct materials used: 110000 lbs at P1.20 132,000
Direct labor: 6000 hours at P14 84,000
Variable overhead 28,000
Fixed overhead 83,000
Required: Compute the direct materials, labor and variable manufacturing overhead price and efficiency variances. Indicate whether the variance is favorable or unfavorable. Label all answers properly with complete solution.
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