1. A company\'s flexible budget for the range of 26,000 units to 40,000 units of

ID: 2410747 • Letter: 1

Question

1. A company's flexible budget for the range of 26,000 units to 40,000 units of production showed variable overhead costs of $3.80 per unit and fixed overhead costs of $69,000. The company incurred total overhead costs of $169,400 while operating at a volume of 40,000 units. The total controllable cost variance is:

2. Parallel Enterprises has collected the following data on one of its products. During the period the company produced 25,000 units. The direct materials price variance is:

3. Summerlin Company budgeted 4,100 pounds of material costing $6.00 per pound to produce 2,000 units. The company actually used 4,600 pounds that cost $6.10 per pound to produce 2,000 units. What is the direct materials price variance?

4. A company provided the following direct materials cost information. Compute the total direct materials cost variance.

5. Cavern Company's output for the current period results in a $5,700 unfavorable direct material price variance. The actual price per pound is $60.50 and the standard price per pound is $57.50. How many pounds of material are used in the current period?

6. Based on a predicted level of production and sales of 33,000 units, a company anticipates total contribution margin of $102,300, fixed costs of $66,000, and operating income of $36,300. Based on this information, the budgeted operating income for 30,000 units would be:

7.The following company information is available. The direct materials quantity variance is:

8.Use the following data to find the direct labor rate variance if the company produced 3,500 units during the period

Direct materials standard (7 kg. @ $2.35/kg.) $16.45 per finished unit Actual cost of materials purchased $392,150 Actual direct materials purchased and used 157,000 kgs.

Explanation / Answer

(1) Controllable Variance:-

Actual Overhead

169400

Budgeted allowance based on standard hours allowed:

Fixed Exp Budget

69000

Variable Exp (40000 * 3.80)

152000

221000

Controllable Variance

51600(F)

(2) Direct Material Price Variance = (SR – AR) * Actual Qty

SR = $2.35/kg

AR = $392150/157000kg = $2.50

Actual Qty = 157000 kg

=(2.35 – 2.50) * 157000 = 23550(U)

(3) Direct Material Price Variance = (SR – AR) * Actual Qty

SR = $6/pound

AR = $392150/157000kg = $6.10

Actual Qty = 4600 pound

=(6 – 6.10) * 4600= 460(U)

(4) Direct Material Cost Variance = Actual Direct Material Cost – Std Direct Material Cost

= 888250 – 810000 = 78250 (U)

(5) DM Price variance = 5700(U)

AR = $60.50

SR = $57.50

Actual Qty = ??

DM Price variance = (SR – AR) * AQ

5700(U) = (57.50 – 60.50) * AQ

-5700 = -3AQ

AQ = 1900

(6)

Contribution Margin (102300/3300) * 3000

93000

(-) Fixed cost

66000

Operating Income

27000

(7)Direct Material Qty Variance = (SQ – AQ) * SR

SQ = 36100

AQ = 38000

SR = 11

= (36100 – 38000) * 11 = 20900(U)

(8) Direct Labour Rate Variance = (SR – AR) * A Hrs

SR = $6.95

AR = $7.40

A Hrs = 12100

=(6.95 – 7.40) * 12100 = 5445(U)