Actual costs incurred to produce 27,000 units Minicase 9 Per unit output Quantit
ID: 2545793 • Letter: A
Question
Actual costs incurred to produce 27,000 units Minicase 9 Per unit output Quantity to be used Total Cost Direct materials, 4 oz. @ $0.28/oz Direct labor, .20 hours @ $7 per hour $1.12 per unit $140 per unit $1.20 per unit 108,000 oz Flexible Budgets and Standard Costs 5.400 hours 7,800 Pacific Company provides the following information about its budgeted and actual results for June 2014. Although the expected June volume was 25,000 mits prodiced and sold, the company actually produced and sold 27,000 units as detailed here 2400 Bu ed 25,000 units Actual 27,000 units $5.23 Standard costs based on expected output of 27,000 units Variable costs Quantity to be used Total Cost Direct materials Direct labor Direct materials, 4 oz. $124 per unit 108,000 oz $33,480 $1.40 37 $1.50 $150 per unit 6,750 hours Direct labor, .25 hours @ $6 per hour costs 40 34 500 Fired costs Required $3,710 2,500 1,250 485 900 $3,750 1. Prepare June flexible budgets showing expected sales, costs, and net income assuming General liability insurance Property tares Other administrative 1,200 500 750 20,000, 25,000, and 30,000 units of output produced and sold. 2. Prepare a flexible budget performance report t compares actual results with the amounts budgeted if the actual volume had been expected. 3. Apply variance analysis for direct materials and direct labor 4. Compute the total overhead variance, and the controllable and volume variances. 5. Compute spending and efficiency variances for overbead. 6. Prepare jounal entries to record standard costs, and price and quantity variances, for ·Indicates factory overhead item; $ 0.75 per unit or $ 3 per direct labor hour for variable overbead, and S 0.25 per unit or $ 1 per direct labor hour for fixed ovehead. direct materials, direct labor, and factory overhead. Standard costs based on expected output of 25,000 units Quantity to be used Total Cost 100,000 oz $124 per unit $150 per unit $1.00 per unit 31,000 37,500 25,000 Direct materials, 4 oz. $0.31/oz Direct labor, .25 hours @ S6 per hour 6,250 hoursExplanation / Answer
Answer 1. Pacific Company Flexible Budgets Flexible Budget Flexible Budget for Variable Amt. per Unit Total Fixed Cost 20,000 Units 25,000 Units 30,000 Units Sales 5.00 100,000.00 125,000.00 150,000.00 Variable Costs Direct Materials 1.24 24,800.00 31,000.00 37,200.00 Direct Labor 1.50 30,000.00 37,500.00 45,000.00 Factory Supplies 0.25 5,000.00 6,250.00 7,500.00 Utilities 0.50 10,000.00 12,500.00 15,000.00 Selling Costs 0.40 8,000.00 10,000.00 12,000.00 Total Variable Costs 3.89 77,800.00 97,250.00 116,700.00 Contribution Margin 1.11 22,200.00 27,750.00 33,300.00 Fixed Costs: Depreciation - Machinery 3,750.00 3,750.00 3,750.00 3,750.00 Depreciation - Building 2,500.00 2,500.00 2,500.00 2,500.00 General Liability Insurance 1,200.00 1,200.00 1,200.00 1,200.00 Property Taxes on Ofice Equipment 500.00 500.00 500.00 500.00 Other Administrative Expense 750.00 750.00 750.00 750.00 Total Fixed Costs 8,700.00 8,700.00 8,700.00 8,700.00 Income From Operations 13,500.00 19,050.00 24,600.00 Answer 2. Pacific Company Flexible Budget Performance Report Flexible Budget Actual Result Variance Sales -27,000 Units 135,000.00 141,210.00 6,210.00 (F) Variable Costs Direct Materials 33,480.00 30,240.00 3,240.00 (F) Direct Labor 40,500.00 37,800.00 2,700.00 (F) Factory Supplies 6,750.00 9,990.00 3,240.00 (U) Utilities 13,500.00 16,200.00 2,700.00 (U) Selling Costs 10,800.00 9,180.00 1,620.00 (F) Total Variable Costs 105,030.00 103,410.00 1,620.00 (F) Contribution Margin 29,970.00 37,800.00 7,830.00 (F) Fixed Costs: Depreciation - Machinery 3,750.00 3,710.00 40.00 (F) Depreciation - Building 2,500.00 2,500.00 - General Liability Insurance 1,200.00 1,250.00 50.00 (U) Property Taxes on Ofice Equipment 500.00 485.00 15.00 (F) Other Administrative Expense 750.00 900.00 150.00 (U) Total Fixed Costs 8,700.00 8,845.00 145.00 (U) Income From Operations 21,270.00 28,955.00 7,685.00 (F) Answer 3. Material Cost Variances Actual Cost - 108,000 oz X $0.28 30,240.00 Standard Cost - 108,000 oz X $0.31 33,480.00 Direct Materials Cost Variance (F) 3,240.00 Actual Cost Flexible Budget Standard Cost AQ X AP AQ X SP SQ X SP 108,000 X 0.28 108,000.00 X 0.31 108,000 X 0.31 30,240 33,480 33,480 Price Variance = $3,240 (F) Quantity Variance = $0 Total Direct Materials Variance = $3,240 (F) Labor Cost Variances Actual Cost - 5,400 hrs X $7 37,800.00 Standard Cost - 6,750 hrs X $6 40,500.00 Direct Materials Cost Variance (F) 2,700.00 Actual Cost Flexible Budget Standard Cost AH X AP AH X SP SH X SP 5,400 X 7.00 5,400.00 X 6.00 6,750 X 6.00 37,800 32,400 40,500 Rate Variance = $5,400 (U) Eficiency Variance = $8,100 (F) Total Direct Labor Variance = $2,700 (F) Answer 4. Overhead Cost Variances Total Overhead Cost incurred - 27,000 Units x $1.20 32,400.00 Total Overhead applied - 27,000 Units X $1 27,000.00 Overhead Cost Variance (U) 5,400.00 Controllable Variance Actual Overhead 32,400.00 Applied Overhead From Flexible Budget 26,500.00 Controllable Variance (F) 5,900.00 Volume Variance Budgeted Fixed Overhead 6,250.00 Applied Fixed Overhead 6,750.00 Volume Variance (F) 500.00
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