Acme Company's production budget for August is 17,500 units and includes the following component unit costs direct materials, $8. direct labor, $10, variable overhead, $6. Budgeted fixed overhead is $35,000 Actual production in August was 17,000 units. Actual unit component costs incurred during August include direct materials, $8 25, direct labor, $9.45, variable overhead, $6.82. Actual fixed overhead was $33,500. The standard direct material cost per unit consists of 10 pounds of raw material at $0 80 per pound. During August, 187,000 pounds of raw material were used that were purchased at $0.75 per pound. Required: Calculate the materials price variance and materials usage variance for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Matenal price variance Material usage vanance
Acme Company's production budget for August is 17,500 units and includes the following component unit costs direct materials, $8. direct labor, $10, variable overhead, $6. Budgeted fixed overhead is $35,000 Actual production in August was 17,000 units. Actual unit component costs incurred during August include direct materials, $8 25, direct labor, $9.45, variable overhead, $6.82. Actual fixed overhead was $33,500. The standard direct material cost per unit consists of 10 pounds of raw material at $0 80 per pound. During August, 187,000 pounds of raw material were used that were purchased at $0.75 per pound. Required: Calculate the materials price variance and materials usage variance for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Matenal price variance Material usage vanance
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text:Acme Company's production budget for August is 17,500 units and includes the following component unit costs direct materials, $8.
direct labor, $10, variable overhead, $6. Budgeted fixed overhead is $35,000 Actual production in August was 17,000 units Actual unit
component costs incurred during August include direct materials, $8.25, direct labor, $9.45, variable overhead, $6.82 Actual fixed
overhead was $33,500. The standard direct material cost per unit consists of 10 pounds of raw material at $0.80 per pound. During
August, 187,000 pounds of raw material were used that were purchased at $0.75 per pound.
Required:
Calculate the materials price variance and materials usage variance for August. (Indicate the effect of each variance by selecting "F"
for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)
Matenal price variance
Material usage variance
4
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