Question

In 1985, Juan Caron, Sr established Scooter’s Inc. to provide scooters for tourist destinations in the United States. After his father’s retirement in 2017, Juan, Jr (Junior) assumed control of the company. In 2018, Junior expected the company’s operating income to increase after they stopped paying his dad’s salary of $125,000. Show calculation for Total Sales Mix Variance, Direct Labor Efficiency Variance and Variable Overhead Spending Variance.

Scooter's Inc Summary of Standard Costs
Summary of Standard Costs		Deluxe	Beginner
Assembly kit per scooter		$               400	$         200
Direct labor hours per scooter		3	1
Direct labor rate per hour		$                  25	$           15
Variable overhead rate per scooter		$                  35	$           35
Sales Price
		2017	2018
Deluxe		$               900	$         900
Beginner		$                350	$         350
Sales Mix Percent
		2017	2018
Deluxe		80%	50%
Beginner		20%	50%
Total Assembled & Sold		6,800	6,800
Scooter's Inc
Summary of Actual Costs
Deluxe		2017	2018
Assembly kits:	Used	5,440	3,425
	Price per kit	$               400	$         500
Direct labor hours		16,320	10,275
Direct labor rate per hour		$                  25	$           27
Variable overhead per scooter		$                  35	$           38
Beginner		2017	2018
Assembly kits:	Used	1,360	3,460
	Price per kit	$                200	$         175
Direct labor hours		1,360	3,460
Direct labor rate per hour		$                  15	$           20
Variable overhead per scooter		$                  35	$           41
Director salaries		$         400,000	$ 275,000

Answer 1

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