The following information is for direct labor cost for X Company for 2016: Budge
ID: 2598274 • Letter: T
Question
The following information is for direct labor cost for X Company for 2016: Budgeted labor hours per unit of product Budgeted hourly wage rate Budgeted production Actual labor hours per unit of product Actual hourly wage rate Actual production 2.9 $12.50 4,970 units 2.4 $13.00 4,410 units 1. What was the direct labor static budget for 2016? Submit Answer Tries o/2 2. What was the direct labor flexible budget variance for 2016 (a positive number means a favorable variance; a negative number means an unfavorable variance)? Submit Answer Tries o/2Explanation / Answer
1 Budgeted direct labor cost=Budgeted production*Budgeted labor hours per unit of product*Budgeted hourly wage rate=4970*2.9*12.50=$ 180162.5 2 Flexible budget variance=Flexible budget labor cost-Actual labor cost Flexible budget labor cost=Actual production*Budgeted labor hours per unit of product*Budgeted hourly wage rate=4410*2.9*12.50=$ 159862.50 Actual labor cost=Actual production*Actual labor hours per unit of product*Actual hourly wage rate=4410*2.4*13=137592 Flexible budget variance=159862.50-137592=$ 22270.50 F 3 Being the first year of operation, Net income=Total assets-Total liabilities-Total paid-in-capital=14607-6259-4497=3851 Total revenue=Total expenses+Net income=16835+3851=$ 20686 4 Cash balance as on Jan 31. Beginning balance 52944 Add:Receipts Sold stock to investors 47000 Borrowed from a bank. 26000 Sold merchandise 16509 Received from customers 3034 92543 145487 Less:Payments Payment to suppliers 3753 Purchase of equipment 35300 Payment to suppliers 3317 rent and insurance 521 wages, utilties, and other miscellaneous expenses 5470 48361 Cash balance as on Jan 31. 97126 5 Total equities as on Jan.31 Beginning balance: Paid-In Capital 234439 Retained earnings 65331 299770 Add: Sold stock to investors 47000 Net income (Refer part 6) 5045 52045 Total equities as on Jan.31 351815 6 Computation of net income: Sale of merchandise (16509+4521) 21030 Less:Cost of merchandise sold 10515 Gross profit 10515 Less:Operating expenses Wages,utilities & miscellaneous expense 5470 Net income 5045 Other transactions has no effect on net income Workings for 8&9. Entries required Date Account titles Debit Credit Jan. 31 1 Rent expense 2700 Prepaid rent (32400/12) 2700 (Rent for jan month recorded) 2 Depreciation expense 467 Accumulated depreciation 467 [(60000-4000)/10]*1/12 (Depreciation recorded) Interest expense 320 Interest payable (48000*8%*1/12) 320 (Interest on note due) 3 Wages expense 1100 Wages payable 1100 (Wages due) 8 Decrease in net income means increase in expense Decrease in net income=2700+467+320+1100=$ 4587 9 Decreased total asset=2700+467=3167 10 Received $66000 from a customer who had previously brought merchandise on account 11 Accounts payable was understated
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