1 answer

Paynesville Corporation manufactures and sells a preservative used in food and drug manufacturing. The company carries...

Question:

Paynesville Corporation manufactures and sells a preservative used in food and drug manufacturing. The company carries no inventories. The master budget calls for the company to manufacture and sell 110,000 liters at a budgeted price of $150 per liter this year. The standard direct cost sheet for one liter of the preservative follows.

Direct materials (2 pounds @ $9) $ 18
Direct labor (0.5 hours @ $34) 17

Variable overhead is applied based on direct labor hours. The variable overhead rate is $70 per direct-labor hour. The fixed overhead rate (at the master budget level of activity) is $35 per unit. All non-manufacturing costs are fixed and are budgeted at $1.7 million for the coming year.

At the end of the year, the costs analyst reported that the sales activity variance for the year was $480,000 unfavorable.

The following is the actual income statement (in thousands of dollars) for the year.

Sales revenue $ 15,838
Less variable costs
Direct materials 1,738
Direct labor 1,760
Variable overhead 3,480
Total variable costs $ 6,978
Contribution margin $ 8,860
Less fixed costs
Fixed manufacturing overhead 1,100
Non-manufacturing costs 1,280
Total fixed costs $ 2,380
Operating profit $ 6,480

During the year, the company purchased 186,000 pounds of material and employed 45,400 hours of direct labor.

Required: a. Compute the direct material price and efficiency variances.
b. Compute the direct labor price and efficiency variances.
c. Compute the variable overhead price and efficiency variances.

(For all requirements, enter your answers in whole dollars. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)

rev: 11_20_2019_QC_CS-191240


Answers

Paynesville Corporation Manufectures
1 First of all we have to calculate actual quantity sold by Enterprise
2 we have not been provided directly with this information but we have been provided Sale Activity Variance
3 Sale activity variance:- The variance is calculated by taking the difference between the actual sales volume at the budgeted mix and the budgeted sales volume and multiplying this by the budgeted price to give a monetary amount.
In simple we can say
Sale activity Variance =(Actuale sale at budget mix - Standard Sale)*Standard price
4 Given Information is as followes
Sale Activity variance:- (-) 480000
Actuale sale = x
Standar Price=150
Now:
(-) 480000 = (x - 110000)*150
(-) 3200 = x - 110000
x = 106800
5 Actuale sale = x = 106800
6

Now we solve require part but before that we will one table to get all data

Amount in $
Particular Standard Standard Actual
1 unit 106800 Units 106800 units
Quantity/Hour Rate Amount Quantity/Hour Rate Amount Quantity/Hour Rate Amount
Material (POUND) 2 9 18 213600 9 1922400 186000 9.3441 1738000
Labour (HOUR) 0.5 34 17 53400 34 1815600 45400 38.767 1760000
Variable Overhead (HOUR) 0.5 70 35 53400 70 3738000 45400 76.652 3480000
7 Required Part
a a. Material Price and efficiency Variance
Material Price variance
(Standard Price - Actual Price)*Actual Quantity
(9 - 9.34)*186000 = $ 63240 (u)
Material Efficiency Variance
(Standard Quantity - Actual Quantity)*Standard Price
(213600 - 186000)*9 = $248400(F)
b Dirct labour Price and Efficiency Variance
Direct Labour Price Variance
(Standard Rate - Actual Rate)*Actual Hours
(34-38.8)*45400 =$ 217920 (U)
Labour Efficeincy Variance
(Standard Hours - Actual Hours)*Standard Rate
(53400 - 45400)*34 = $ 272000 (F)
c Variable Overhead and efficiency Variance
Variable Overhead Price Variance
(Standard Rate - Actual Rate)*Actual Hours
(70 - 76.7)*45400 = $ 304180
Varialbe Overhead Efficiency Variance
(Standard Hours - Actual Hours)*Standard Rate
(53400 - 45400) * 70 = $ 560000
All The Above answer are round off to 2 Decimal so there might be difference due to roundoff
.

Similar Solved Questions

1 answer
How do you solve #x+ \frac { 3} { 4} = 5\frac { 4} { 5}#?
How do you solve #x+ \frac { 3} { 4} = 5\frac { 4} { 5}#?...
1 answer
Give me the reason about the correct choice. 2. A ball rolling down a hill is...
give me the reason about the correct choice. 2. A ball rolling down a hill is an example of the conversion of: Kinetic energy to gravitational potential energy b) Chemical potential energy to gravitational potential energy c) Chemical potential energy to thermal energy d) Gravitational potential ...
1 answer
A s shown in Figure 1, the flow field s of cricket balls in a uniform...
A s shown in Figure 1, the flow field s of cricket balls in a uniform flow were visualized by using oil smoke techniques (a) From the flow visualization results shown in Figure 1(a), one can see the flow over the lower surface of cricket ball separates earlier than the flow over upper surface. Pleas...
1 answer
Thank you :) Ch 15 Saved 26 Part 2 of 4 Required Information Use the following...
thank you :) Ch 15 Saved 26 Part 2 of 4 Required Information Use the following information to answer questions The following information applies to the questions displayed below] 0.25 The following information is available for Lock-Tite Company, which produces special-order security products a...
1 answer
No excel. 14. (4 pts) A special power tool for plastic products costs $400, has a...
No excel. 14. (4 pts) A special power tool for plastic products costs $400, has a four-year useful life, no salvage value, and uniform annual end-of-year benefits (before tax) of $200 per year. Compute the after-tax present worth (for an MARR of 10%), based on MACRS depreciation and a 21% corporate ...
1 answer
Consider the following reaction: 4NO(g) + O2(g) + 2N203(9) What is the rate of disappearance of...
Consider the following reaction: 4NO(g) + O2(g) + 2N203(9) What is the rate of disappearance of O2 when the rate of disappearance of NO is 1.60 x 10-4 mol L 'sec 1 O 1.6 x 10-4 mol L sec1 O 6.4 x 10-4 mol L 'sec1 O 4.0 x 10-5 mol Lºsec1 O 3.2 x 10-4 mol L 'sec1 O 8.0 x 10-5 mol L...
1 answer
Please help
A small block of mass m = 1.7 kg slides,without friction, along the loop-the-loop track shown. The blockstarts from the point P adistance h = 58.0 mabove the bottom of the loop of radius R = 19.0 m. What isthe kinetic energy of the mass at the point A on theloop?What is the downward acceleration of ...
1 answer
When ten is subtracted from the opposite of a number, the resulting difference is 5. What is the number?
When ten is subtracted from the opposite of a number, the resulting difference is 5. What is the number?...
1 answer
Object 1 has a total charge of -3e and object 2 has a total charge of...
Object 1 has a total charge of -3e and object 2 has a total charge of +6e. They are involved in a charging process and object 2 gives 4 electrons to object 1. What is the total charge of object 1 in terms of e now?...
1 answer
2.2-5 The force FR in elevating cylinder EB of a mobile crane has a magnitude of...
2.2-5 The force FR in elevating cylinder EB of a mobile crane has a magnitude of 2500 lb. Assume that a = 80°, B = 45°, and that dimension BC = 18 ft. (a) Find moment vector Me in terms of unit vectors i, j, and k. (b) Confirm the result in part (a) using Varignon's theorem. Cable runs o...
1 answer
Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales...
Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own; rather, it relies completely on independent sales agents to market its products. These agents are paid a sales commission of 15% for all items sold. Barbara Cheney, Pittman...
1 answer
Required Information The following information applies to the questions displayed below) Jorgansen Lighting, Inc., manufactures heavy...
Required Information The following information applies to the questions displayed below) Jorgansen Lighting, Inc., manufactures heavy duty street lighting systems for municipalities. The company uses variable costing for internal management reports and absorption costing for external reports to shar...
1 answer
. Nodaway Valley Bank receives a $5,000 deposit. Assume that banking regulations require banks to hold...
. Nodaway Valley Bank receives a $5,000 deposit. Assume that banking regulations require banks to hold 10% of their checkable deposits as reserves. Nodaway Valley Bank chooses not to hold excess reserves buy to make loans instead. Construct a T-account to illustrate the change in Nodaway Valley Bank...
1 answer
What is the average velocity (in m/s) of a bicycle that starts 150 meters north of town and is 1200 meters north of town after 30.0 minutes?
What is the average velocity (in m/s) of a bicycle that starts 150 meters north of town and is 1200 meters north of town after 30.0 minutes?...