The budgeted production of SunCo Inc. is 9,000 units per month. Each unit requir

Question

The budgeted production of SunCo Inc. is 9,000 units per month. Each unit requires 30 minutes of direct labor to complete. The direct labor rate is $50 per hour. Calculate the budgeted cost of direct labor for the month.

Star Stapler Company prepared the following static budget for the year 2015:

Static Budget
Units/Volume                                         6,000
                                       Per Unit
Sales Revenue                   $7.00       $42,000
Variable Expenses             $1.50           9,000
Contribution Margin                           33,000
Fixed Expenses                                     3,000
Operating Income/(Loss)                     30,000

If a flexible budget was prepared at a volume of 7,000, calculate the amount of operating income.

BigTex Furnishings Company has prepared a static budget at the beginning of the month. At the end of the month, the following information has been retrieved from the records.

Static Budget

Sales volume: 1,000 units: Price: $70 per unit
Variable expense: $32 per unit: Fixed expenses: $37,500 per month
Operating income: $500

Actual Results

Sales volume: 900 units: Price $75 per unit
Variable expenses: $35 per unit: Fixed expenses: $33,000
Operating income: $6,510

Calculate the flexible budget variance for Sales Revenue.

Lone Star Hardware Company has prepared a static budget at the beginning of the month. At the end of the month, the following information has been retrieved from the records.

Static Budget

Sales volume: 2,000 units: Price: $50 per unit
Variable expense: $12 per unit: Fixed expenses: $25,000 per month
Operating income: $51,000

Actual Results

Sales volume: 1,800 units: Price $58 per unit
Variable expenses: $16 per unit: Fixed expenses: $35,000
Operating income: $40,600

Calculate the flexible budget variance for Operating Income.

Aaron Inc. estimates direct labor costs and manufacturing overhead costs for the coming year to be $800,000 and $500,000, respectively. Aaron allocates overhead costs based on machine hours. The estimated total labor hours and machine hours for the coming year are 16,000 hours and 10,000 hours, respectively. What is the predetermined overhead allocation rate?

Explanation / Answer

1 Budgeted Production 9000 Labor Timein Hours PU 0.5 Total Timre Required 4500 Direct Labor Rate PH 50 Budgeted Labor Cost 225000 Answer 225000 2 Units PU 6000 7000 Sales 7 42000 49000 VC 1.5 9000 10500 CM 5.5 33000 38500 Fixed Cost 3000 3000 OI(L) 30000 35500 Answer 35500 3 Budget Flexible Budget Actual Variance Units PU 1000 PU 900 PU 900 Sales 70 70000 70 63000 75 67500 4500 F VC 32 32000 32 28800 35 31500 CM 38 38000 38 34200 40 36000 Fixed Cost 37500 37500 33000 OI(L) 500 -3300 3000 Answer 4500F Some error in given options 4 Budget Flexible Budget Actual Variance Units PU 2000 PU 1800 PU 1800 Sales 50 100000 50 90000 58 104400 VC 12 24000 12 21600 16 28800 CM 38 76000 38 68400 42 75600 Fixed Cost 25000 25000 35000 OI(L) 51000 43400 40600 -2800 U Answer 2800U 5 Direct Labor Cost 800000 Manufacturing OH Cost 500000 (Based on Machine Hr) Estimated: Labor Hours 16000 Machine Hours 10000 Predetermined Overhead Allocation Rate: Manufacturing OH Cost 500000 Machine Hours 10000 Predetermined Overhead Allocation Rate 50 Per Machine Hour Answer 50 Per MH

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