1. The accountant at EZ Toys, Inc. is analyzing the production and cost data for
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Question
1. The accountant at EZ Toys, Inc. is analyzing the production and cost data for its Trucks Division. For October, the actual results and the master budget data are presented below.
Actual results
Budget data
10,000 trucks produced and sold
12,000 trucks planned
Unit selling price
$15
Unit selling price
$14
Variable costs:
Unit variable cost:
Direct materials
$52,800
Direct materials
$5
Direct labor
51,000
Direct labor
4
Variable overhead
23,000
Variable overhead
2
Total variable costs
$126,800
Total unit variable costs
$11
Fixed overhead
$9,000
Fixed overhead
$9,600
Calculate the actual, flexible budget and static budget income statements. Label the total variance due to cost control and due to activity/volume.
Actual results
Budget data
10,000 trucks produced and sold
12,000 trucks planned
Unit selling price
$15
Unit selling price
$14
Variable costs:
Unit variable cost:
Direct materials
$52,800
Direct materials
$5
Direct labor
51,000
Direct labor
4
Variable overhead
23,000
Variable overhead
2
Total variable costs
$126,800
Total unit variable costs
$11
Fixed overhead
$9,000
Fixed overhead
$9,600
Explanation / Answer
Flexible budget Flexible budger Sales activity Master budger Actual based on manufacturing Sales price based on 10,000 Variance based on 10,000 units variance Variance units 12,000 units sales revenue 150,000 10,000 F 140,000 28,000 U 168,000 less : Costs Variable costs direct materials 53,360 3,360 U 50,000 10,000 F 60,000 Direct labor 53,200 13,200 U 40,000 8,000 F 48,000 Variable overhead 23,600 3,600 U 20,000 4,000 F 24,000 total variable cost 130,160 20,160 U 110,000 22,000 F 132,000 Contribution margin 19,840 30,000 6,000 U 36,000 Fixed overhead 9,000 600 F 9,600 0 9,600 Operating profit 10,840 19,560 U 10,000 F 20,400 6,000 U 26,400
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