In: Accounting
1. Edison Electronics produces wireless headphones. Management planned to make and sell 9,000 sets of headphones during the year and determined the standard price and cost data to be as follows:
Standard price and variable costs |
|
Sales |
$135.00 per unit |
Raw Materials |
$33.20 per unit |
Direct Labor |
$42.50 per unit |
Overhead |
$19.70 per unit |
Planned fixed costs |
|
Manufacturing overhead |
$98,000 |
Selling, general and administrative costs |
$138,000 |
Edison Electronics actually produced and sold 9,700 sets of headphones for the year. Actual sales and costs for the year were as follows:
Sales |
$1,285,300 |
Variable costs |
|
Raw Materials |
$335,600 |
Direct Labor |
$405,500 |
Overhead |
$180,400 |
Fixed costs |
|
Manufacturing overhead |
$102,500 |
Selling, general and administrative costs |
$134,800 |
Required:
Particulars | Amount |
Sales | 1215000 |
Variable costs: | |
Raw Materials | 298800 |
Direct Labor | 382500 |
Overhead | 177300 |
Contribution | 356400 |
Fixed Cost: | |
Manufacturing OH | 98000 |
Selling General and Admn Cost | 138000 |
Gross Profit | 120400 |
Particulars | Budgeted | Actual | Variance |
Favorable or Unfavorable |
Sales | 1215000 | 1285300 | ||
Variable costs: | ||||
Raw Materials | 298800 | 335600 | 13560 | Unfavorable |
Direct Labor | 382500 | 405500 | -6750 | Favorable |
Overhead | 177300 | 180400 | -10690 | Favorable |
Contribution | 356400 | 363800 | ||
Fixed Cost: | ||||
Manufacturing OH | 98000 | 102500 | 4500 | Unfavorable |
Selling General and Admn Cost | 138000 | 134800 | -3200 | Favorable |
Gross Profit | 120400 | 126500 |
CALCULATIONS:
Raw Material Variance=335600-(9700*33.2)=13560
Direct Labour Variance=405500-(9700*42.5)=-6750
Overhead Variance=180400-(9700*19.7)=-10690