Question
In: Accounting
A.) Last year, Bandana Corporation budgeted for production and sales of 11,000 bandanas. The company produced...
A.) Last year, Bandana Corporation budgeted for production and sales of 11,000 bandanas. The company produced and sold 10,500 bandanas. Each bandana has a standard requiring 2 feet of material at a budgeted cost of $1.50 per foot and 30 minutes of sewing time at a cost of $0.30 per minute. The bandanas sell for $14.75. Actual costs for for the production of 10,500 bandanas were $33,880 for materials (22,000 feet at $1.54 per foot) and $92,800 for labor (320,000 minutes at $0.29 per minute). What was Bandana's sales volume variance?
a.) $1,695
b.) $1,345
c.) $1,375
d.) $1,595
B.Refer to the information above. Bandana's actual revenue from bandana sales was $154,875. What was bandana's sales price variance?
a.) $1,950 F
b.) $1,950 U
c.) $0
d.) It cannot be determined from the information provided
C.) Refer to the information in question A.). What was Bandana's direct material price variance?
a.) $1,500 F
b.) $1,500 U
c.) $880F
d.) $880 U
D.) Refer to the information in question A.). What was Bandana's direct material usage variance?
a.) $1,500 F
b.) $1,500 U
c.) $880 F
d.) $880 U
E.) Refer to the information in question A.). What was Bandana's direct labor rate variance?
a.) $1,500 F
b.) $1,500 U
c.) $3,200 F
d.) $3,200 U
F. Refer to the information in question A.). What was BAndana's direct labor efficiency varince?
a.) $1,500 F
b.) $1,500 U
c.) $3,200 F
d.) $3,200 U
Solutions
Expert Solution
| Budgeted Production | 11000 | |||||||||
| Actual Production | 10500 | |||||||||
| Standard Material Cost per unit | = | Material per unit * per unit material price | ||||||||
| Standard Material Cost per unit | = | 2*1.5 | ||||||||
| Standard Material Cost per unit | = | $ 3.00 | ||||||||
| Direct Labor Cost | = | Time per unit* price per minute | ||||||||
| Direct Labor Cost | = | 30*.3 | ||||||||
| Direct Labor Cost | = | $ 9.00 | ||||||||
| Total direct cost | = | Material Cost + Direct Labor | ||||||||
| Total direct cost | = | 3+9 | ||||||||
| Total direct cost | = | $ 12.00 | ||||||||
| Sales Price | = | $ 14.75 | ||||||||
| Standard Profit/Unit | = | Sales price-Total direct cost | ||||||||
| Standard Profit/Unit | = | 14.75-12 | ||||||||
| Standard Profit/Unit | = | $ 2.75 | ||||||||
| A | Sales Volume Variance | = | (Actual Units Sold - Budgeted Units Sold)*Standard Profit per unit | |||||||
| Sales Volume Variance | = | (10500-11000)*2.75 | ||||||||
| Sales Volume Variance | = | $ (1,375) | ||||||||
| Option C - $ 1375 | ||||||||||
| B | Sales Price Revenue | = | Actual Quantity sold *( Actual Selling Price - Budgeted Selling Price ) | |||||||
| Actual Revenue | = | $154,875 | ||||||||
| Actual Units | = | 10,500 | ||||||||
| Actual Sales Price | = | $14.75 | ||||||||
| Since Actual and budgeted sales price is same so there will be Zero Sales Price variance. | ||||||||||
| Option C - $0 | ||||||||||
| C | Direct Material Price Variance | = | (Actual Material Price/Unit - Budgeted Material Price/Unit)*Actual material | |||||||
| Direct Material Price Variance | = | (1.54-1.5)*22000 | ||||||||
| Direct Material Price Variance | = | $ 880 | U | |||||||
| Option D - $ 880U | ||||||||||
| D | Direct Material Usage Variance | = | (Actual Quantity - standard quantity for actual production ) * standard price | |||||||
| Direct Material Usage Variance | = | (22000-21000)*1.5 | ||||||||
| Direct Material Usage Variance | $ 1,500 | U | ||||||||
| Option B - $ 1500 U | ||||||||||
| E | Direct Labor Rate Variance | = | (Actual Labor Rate-Budgeted Labor Rate)*Actual time | |||||||
| Direct Labor Rate Variance | = | (.29-.3)*320000 |
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