Johnson Electrical produces industrial ventilation fans. The company plans to manufacture 66,000 fans evenly over the next quarter at the following costs: direct material, $1,584,000; direct labor, $330,000; variable production overhead, $458,700; and fixed production overhead, $951,000. The $951,000 amount includes $69,000 of straight-line depreciation and $129,000 of supervisory salaries. Shortly after the conclusion of the quarter's first month, Johnson reported the following costs: Direct material Direct labor $ 448,900 104,500 159,000 Variable production overhead 23,000 44,700 245,000 $ 1,025,100 Depreciation Supervisory salaries. Other fixed production overhead Total Dave Kellerman and his crews turned out 18,000 fans during the month-a remarkable feat given that the firm's manufacturing plant was closed for several days because of storm damage and flooding. Kellerman was especially pleased with the fact that overall financial performance for the period was favorable when compared with the budget. His pleasure, however, was very short-lived, as Johnson's general manager issued a stern warning that performance must improve, and improve quickly, if Kellerman had any hopes of keeping his job.

Johnson Electrical produces industrial ventilation fans. The company plans to manufacture 66,000 fans evenly over the next quarter at the following costs: direct material, $1,584,000; direct labor, $330,000; variable production overhead, $458,700; and fixed production overhead, $951,000. The $951,000 amount includes $69,000 of straight-line depreciation and $129,000 of supervisory salaries. Shortly after the conclusion of the quarter's first month, Johnson reported the following costs: Direct material Direct labor $ 448,900 104,500 159,000 Variable production overhead 23,000 44,700 245,000 $ 1,025,100 Depreciation Supervisory salaries. Other fixed production overhead Total Dave Kellerman and his crews turned out 18,000 fans during the month-a remarkable feat given that the firm's manufacturing plant was closed for several days because of storm damage and flooding. Kellerman was especially pleased with the fact that overall financial performance for the period was favorable when compared with the budget. His pleasure, however, was very short-lived, as Johnson's general manager issued a stern warning that performance must improve, and improve quickly, if Kellerman had any hopes of keeping his job.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 3CMA: Aril Industries is a multiproduct company that currently manufactures 30,000 units of Part 730 each...

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