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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 150,000 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 (3 pounds @ $2) $6 (8.25 hours @$32) 8 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: Sales revenue Less variable costs Direct materials Direct labor Variable overhead Total variable costs Contribution margin Less fixed costs $ 10,300 1,010 1,217 648 $2,867 $7,433 Fixed manufacturing overhead 1,565 Nonmanufacturing costs 2,130 Total fixed costs $3,695 $ 3,738 Operating profit Required: Prepare a profit variance analysis. Note: Enter your answers In thousands of dollars. Indicate the effect of each varlance 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 150,000 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 (3 pounds @ $2) $6 (8.25 hours @$32) 8 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: Sales revenue Less variable costs Direct materials Direct labor Variable overhead Total variable costs Contribution margin Less fixed costs $ 10,300 1,010 1,217 648 $2,867 $7,433 Fixed manufacturing overhead 1,565 Nonmanufacturing costs 2,130 Total fixed costs $3,695 $ 3,738 Operating profit Required: Prepare a profit variance analysis. Note: Enter your answers In thousands of dollars. Indicate the effect of each varlance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter9: Evaluating Variances From Standard Costs
Section: Chapter Questions
Problem 4CMA: JoyT Company manufactures Maxi Dolls for sale in toy stores. In planning for this year, JoyT...
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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 150,000 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 (3 pounds @$2) (8.25 hours @ $32) $ 6 8 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: Sales revenue Less variable costs Direct materials Direct labor Variable overhead Total variable costs Contribution margin Less fixed costs Fixed manufacturing overhead Nonmanufacturing costs Total fixed costs Operating profit $ 10,300 1,010 1,217 640 $ 2,867 $ 7,433 1,565 2,130 $3,695 $ 3,738 Required: Prepare a profit variance analysis. Note: Enter your answers in thousands of dollars. Indicate the effect of each varlance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. GOLDEN FOOD PRODUCTS Profit Variance Analysis Actual Manufacturing Variances Sales revenue Materials S 10,300 1,010 U Direct labor 1,217 F Variable overhead 640 P Total variable costs $ 2,867 P Contribution margin S 7,433 P Fixed costs: Non-Manufacturing Variances Sales Price Variance Flexible Budget Sales Activity Variance Master Budget F $ 158,000 F Ս 2 2 $ 0 $ 0 EL $ 158,000 F $ 0 Manufacturing 1,565 2 Non-manufacturing 2,130 F Total fixed costs $ 3,695 Մ F $ 0 $ 0 Operating profits S 3,738 2 $ 158,000 $ 0
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 150,000 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 (3 pounds @$2) (8.25 hours @ $32) $ 6 8 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: Sales revenue Less variable costs Direct materials Direct labor Variable overhead Total variable costs Contribution margin Less fixed costs Fixed manufacturing overhead Nonmanufacturing costs Total fixed costs Operating profit $ 10,300 1,010 1,217 640 $ 2,867 $ 7,433 1,565 2,130 $3,695 $ 3,738 Required: Prepare a profit variance analysis. Note: Enter your answers in thousands of dollars. Indicate the effect of each varlance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. GOLDEN FOOD PRODUCTS Profit Variance Analysis Actual Manufacturing Variances Sales revenue Materials S 10,300 1,010 U Direct labor 1,217 F Variable overhead 640 P Total variable costs $ 2,867 P Contribution margin S 7,433 P Fixed costs: Non-Manufacturing Variances Sales Price Variance Flexible Budget Sales Activity Variance Master Budget F $ 158,000 F Ս 2 2 $ 0 $ 0 EL $ 158,000 F $ 0 Manufacturing 1,565 2 Non-manufacturing 2,130 F Total fixed costs $ 3,695 Մ F $ 0 $ 0 Operating profits S 3,738 2 $ 158,000 $ 0
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