Required 1. Calculate the sales-volume variance and flexible-budget variance for operating income. 2. Compute price and efficiency variances for direct materials and direct manufacturing labour.

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 3E: Salisbury Bottle Company manufactures plastic two-liter bottles for the beverage industry. The cost...
icon
Related questions
Question

 Flexible budget, direct materials, and direct manufacturing labour variances. Emerald
Statuary manufactures bust statues of famous historical figures. All statues are the same size. Each unit
requires the same amount of resources. The following information is from the static budget for 2021:

Expected production and sales
Expected selling price per unit
Total fixed costs
7,000 units
$ 680
$1,400,000

Standard quantities, standard prices, and standard unit costs follow for direct materials and direct manufacturing labour:
Standard Quantity Standard Price Standard Unit Cost
Standard quantity Standard price Standard unit cost

Direct materials
Direct manufacturing labour
10 kilograms
3.7 hours
$ 8 per kilogram
$50 per hour
$ 80
$185

During 2021, actual number of units produced and sold was 4,800, at an average selling price of $720. Actual
cost of direct materials used was $392,700, based on 66,000 kilograms purchased at $5.95 per kilogram.
Direct manufacturing labour-hours actually used were 18,300, at the rate of $48 per hour. As a result, actual
direct manufacturing labour costs were $878,400. Actual fixed costs were $1,170,000. There were no beginning or ending inventories.
Required
1. Calculate the sales-volume variance and flexible-budget variance for operating income.
2. Compute price and efficiency variances for direct materials and direct manufacturing labour. 

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Risk Analysis
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Managerial Accounting
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Financial And Managerial Accounting
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Principles of Accounting Volume 2
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Cornerstones of Cost Management (Cornerstones Ser…
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Principles of Cost Accounting
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning