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Golden Food Products produces special-formula pet food. The company carries no inventories. The master budget calls for the company to manufacture and sell 156,000 cases at a budgeted price of $60 per case this year. The standard direct cost sheet for one case of pet food follows: Direct materials Direct labor Sales revenue Less variable costs Variable overhead is applied based on direct labor-hours. The variable overhead rate is $16 per direct labor-hour. The fixed overhead rate (at the master budget level of activity) is $10 per unit. All nonmanufacturing costs are fixed and are budgeted at $2.2 million for the coming year. At the end of the year, the costs analyst reported that the sales activity variance for the year was $336,000 favorable. The following is the actual income statement (in thousands of dollars) for the year for Golden Food Products: Direct materials. Direct labor Variable overhead Total variable costs (3 pounds @ $2) (0.25 hours @ $32) Contribution margin Less fixed costs Fixed manufacturing overhead Nonmanufacturing costs Total fixed costs Operating profit $ 10,800 1,052 1,262 665 $ 2,979 $7,821 $6 8 1,630 2,131 $3,761 $ 4,060 Required: Prepare a profit variance analysis. Note: Enter your answers in thousands of dollars. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.

Golden Food Products produces special-formula pet food. The company carries no inventories. The master budget calls for the company to manufacture and sell 156,000 cases at a budgeted price of $60 per case this year. The standard direct cost sheet for one case of pet food follows: Direct materials Direct labor Sales revenue Less variable costs Variable overhead is applied based on direct labor-hours. The variable overhead rate is $16 per direct labor-hour. The fixed overhead rate (at the master budget level of activity) is $10 per unit. All nonmanufacturing costs are fixed and are budgeted at $2.2 million for the coming year. At the end of the year, the costs analyst reported that the sales activity variance for the year was $336,000 favorable. The following is the actual income statement (in thousands of dollars) for the year for Golden Food Products: Direct materials. Direct labor Variable overhead Total variable costs (3 pounds @ $2) (0.25 hours @ $32) Contribution margin Less fixed costs Fixed manufacturing overhead Nonmanufacturing costs Total fixed costs Operating profit $ 10,800 1,052 1,262 665 $ 2,979 $7,821 $6 8 1,630 2,131 $3,761 $ 4,060 Required: Prepare a profit variance analysis. Note: Enter your answers in thousands of dollars. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter18: Pricing And Profitability Analysis
Section: Chapter Questions
Problem 15E: Flaherty, Inc., has just completed its first year of operations. The unit costs on a normal costing...
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Golden Food Products produces special-formula pet food. The company carries no inventories. The master budget calls for the company to manufacture and sell 156,000 cases at a budgeted price of $60 per case this year. The standard direct cost sheet for one case of pet food follows: Direct materials Direct labor Sales revenue Less variable costs Variable overhead is applied based on direct labor-hours. The variable overhead rate is $16 per direct labor-hour. The fixed overhead rate (at the master budget level of activity) is $10 per unit. All nonmanufacturing costs are fixed and are budgeted at $2.2 million for the coming year. At the end of the year, the costs analyst reported that the sales activity variance for the year was $336,000 favorable. The following is the actual income statement (in thousands of dollars) for the year for Golden Food Products: Direct materials Direct labor Variable overhead Total variable costs (3 pounds @ $2) (0.25 hours @ $32) Contribution margin Less fixed costs Fixed manufacturing overhead Nonmanufacturing costs Total fixed costs Operating profit $ 10,800 1,052 1,262 665 $ 2,979 $ 7,821 $6 8 1,630 2,131 $ 3,761 $ 4,060 Required: Prepare a profit variance analysis. Note: Enter your answers in thousands of dollars. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.
Transcribed Image Text:Golden Food Products produces special-formula pet food. The company carries no inventories. The master budget calls for the company to manufacture and sell 156,000 cases at a budgeted price of $60 per case this year. The standard direct cost sheet for one case of pet food follows: Direct materials Direct labor Sales revenue Less variable costs Variable overhead is applied based on direct labor-hours. The variable overhead rate is $16 per direct labor-hour. The fixed overhead rate (at the master budget level of activity) is $10 per unit. All nonmanufacturing costs are fixed and are budgeted at $2.2 million for the coming year. At the end of the year, the costs analyst reported that the sales activity variance for the year was $336,000 favorable. The following is the actual income statement (in thousands of dollars) for the year for Golden Food Products: Direct materials Direct labor Variable overhead Total variable costs (3 pounds @ $2) (0.25 hours @ $32) Contribution margin Less fixed costs Fixed manufacturing overhead Nonmanufacturing costs Total fixed costs Operating profit $ 10,800 1,052 1,262 665 $ 2,979 $ 7,821 $6 8 1,630 2,131 $ 3,761 $ 4,060 Required: Prepare a profit variance analysis. Note: Enter your answers in thousands of dollars. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.
Prepare a profit variance analysis. Note: Enter your answers in thousands of dollars. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. Sales revenue Materials Direct labor Variable overhead Total variable costs Contribution margin Fixed costs: Manufacturing Non-manufacturing Total fixed costs Operating profits $ $ $ Actual 10,800 1,052 1,262 665 2,979 7,821 1,630 2,131 $ 3,761 $ 4,060 GOLDEN FOOD PRODUCTS Profit Variance Analysis Manufacturing Variances Non-Manufacturing Variances Sales Price Variance Flexible Budget $ $ $ $ 0 0 0 0 Sales Activity Variance Master Budget $ $ $ $ 0 0 0 0
Transcribed Image Text:Prepare a profit variance analysis. Note: Enter your answers in thousands of dollars. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. Sales revenue Materials Direct labor Variable overhead Total variable costs Contribution margin Fixed costs: Manufacturing Non-manufacturing Total fixed costs Operating profits $ $ $ Actual 10,800 1,052 1,262 665 2,979 7,821 1,630 2,131 $ 3,761 $ 4,060 GOLDEN FOOD PRODUCTS Profit Variance Analysis Manufacturing Variances Non-Manufacturing Variances Sales Price Variance Flexible Budget $ $ $ $ 0 0 0 0 Sales Activity Variance Master Budget $ $ $ $ 0 0 0 0
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