Question

In: Accounting

1. The Accountant at EZ Toys, Inc. is analyzing the production and costs data for its...

1. The Accountant at EZ Toys, Inc. is analyzing the production and costs data for its Trucks

Division. For October, the actual results and the master budget data are presented below.

Actual Results

Budget Data

Produced and sold

10,000

Production and sales

12,000

Unit Selling Price

$15

Unit Selling Price

$15

Variable Costs:

Unit Variable Costs:

Direct materials

$52,800

Direct materials

$5

Direct labor

51,000

Direct labor

4

Variable OH

23,000

Variable OH

2

Total variable Costs $126,800

Total unit variable costs $11

Fixed Overhead

$9,000

Fixed Overhead

$9,600

Required: Prepare a variance analysis to compare actual results and master budget.

2. Required: Use the data above to determine the flexible budget variance and the sales volume

variance.

3. Required: Calculate the direct materials variances for October using the following

Information regarding the use of direct materials at EZ Toys’ Trucks Division for October:

Standard Costs

2 units per truck @ $2.5 per unit

Trucks produced in October = 10,000

Actual Materials purchased and used 22,000 units @ $2.4 per unit

4. Required: Calculate the direct labor variances for October using the following Information

regarding the use of direct labors at EZ Toys’ Trucks Division for October:

Standard Costs

0.4 hours per truck @ $10 per hour

Trucks produced in October = 10,000

Actual Direct Labor costs

Actual hours worked = 5,000 hours

Total actual labor cost = $51,000

Average cost per hour = $10.20

What might be causing these variance

Solutions

Expert Solution

Ques 1
Acutal Variance Mater budget
Units 10000 2000 U 12000
Sales 150000 18000 U 168000 (12000*14)
Less:costs
Variable costs
Direct mat. 52800 7200 F 60000 (12000*5)
Direct Lab 51000 3000 U 48000 (12000*4)
VOH 23000 1000 F 24000 (12000*2)
Total variable costs 126800 5200 F 132000
contribution margin 23200 12800 U 36000
Fixed overhead 9000 600 F 9600
operating profit 14200 12200 U 26400
Ques 2
Acutal Flexible budget variances Flexible budget Sales volume variance Mater budget
Units 10000 10000 12000
Sales 150000 10000 F 140000 28000 U 168000
Less:costs
Variable costs
Direct mat. 52800 2800 U 50000 10000 F 60000
Direct Lab 51000 11000 U 40000 8000 F 48000
VOH 23000 3000 U 20000 4000 F 24000
Total variable costs 126800 16800 U 110000 22000 F 132000
contribution margin 23200 12800 U 30000 6000 U 36000
Fixed overhead 9000 600 F 9600 0 9600
operating profit 14200 6200 U 20400 6000 U 26400
Ques 3
Actual costs = AQ * AP
Actual costs = 2.4*22000
Actual costs= 52800
Actual input at standard price
2.5*22000= 55000
Flexible production budget
std qt * std rate
2.5*20000 50000
So we have
price variance 2200 F
55000-52800=
Efficiency variance 5000 U
55000-50000
Total cost variance 2800 U
Ques 4
Actual costs = AH * AR
Actual costs =10.2*5000
Actual costs= 51000
Actual input at standard price
10*5000= 50000
Flexible production budget
std HRS * std rate
10*4000 40000
So we have
price variance 1000 U
55000-52800=
Efficiency variance 10000 U
50000-40000
Total cost variance 11000 U

ekkarill92 answered 2 months ago
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