Dinkel Manufacturing Corporation accumulates the following data relative to jobs

Question

Dinkel Manufacturing Corporation accumulates the following data relative to jobs started and finished during the month of June 2012.
Costs and Production Data
Actual
Standard

Raw materials unit cost $2.25 $2.00
Raw materials units used 10,600 10,000
Direct labor payroll $122,400 $120,000
Direct labor hours worked 14,400 15,000
Manufacturing overhead incurred $184,500
Manufacturing overhead applied $189,000
Machine hours expected to be used at normal capacity 42,500
Budgeted fixed overhead for June $51,000
Variable overhead rate per hour $3.00
Fixed overhead rate per hour $1.20


Overhead is applied on the basis of standard machine hours. Three hours of machine time are required for each direct labor hour. The jobs were sold for $400,000. Selling and administrative expenses were $40,000. Assume that the amount of raw materials purchased equaled the amount used.





Compute all of the variances for (1) direct materials and (2) direct labor.
Total materials variance $ UnfavorableFavorable
Materials price variance $ FavorableUnfavorable
Materials quantity variance $ FavorableUnfavorable
Total labor variance $ UnfavorableFavorable
Labor price variance $ UnfavorableFavorable
Labor quantity variance $ FavorableUnfavorable







Compute the total overhead variance.
$ FavorableUnfavorable






Complete the income statement for management. Ignore income taxes. (List amounts from largest positive to smallest positive followed by most negative to least negative, e.g. 15, 14, 10, -17, -5, -1. For negative numbers use either a negative sign preceding the number, e.g. -45 or parenthesis, e.g. (45).)
DINKEL MANUFACTURING CORPORATION

Income Statement
For the Month Ended June 30, 2012

Cost of goods soldSalesOverheadMaterials priceLabor priceSelling and administrative expensesMaterials quantityLabor quantity $
OverheadCost of goods soldSelling and administrative expensesMaterials quantityLabor quantitySalesMaterials priceLabor price

Gross profit (at standard)
Variances
Labor priceLabor quantitySalesSelling and administrative expensesOverheadCost of goods soldMaterials priceMaterials quantity $
Materials priceLabor priceLabor quantityOverheadCost of goods soldMaterials quantitySelling and administrative expensesSales
Selling and administrative expensesLabor priceMaterials priceLabor quantityOverheadMaterials quantitySalesCost of goods sold
Cost of goods soldLabor quantityMaterials priceSalesMaterials quantityLabor priceOverheadSelling and administrative expenses
Materials priceMaterials quantityLabor priceOverheadCost of goods soldLabor quantitySalesSelling and administrative expenses

Total variance - UnfavorableFavorable

Gross profit (actual)
Labor priceMaterials quantityOverheadSalesSelling and administrative expensesCost of goods soldLabor quantityMaterials price

Net income $

Explanation / Answer

Total materials variance $______ UnfavorableFavorable Total variance = price variance + quantity variance = 3850 unfavorable Materials price variance $_______ FavorableUnfavorable Price variance = AQ(AP-SP) = 10,600(2.25 – 2) = 2650 unfavorable Materials quantity variance $________ FavorableUnfavorable Quantity variance = SP(AQ-SQ) = 2.00(10,600 – 10,000) = 1200 unfavorable Total labor variance $_______ UnfavorableFavorable Total variance = price variance + quantity variance = 7200 + -4800 = 2400 unfavorable Labor price variance $______ UnfavorableFavorable Price variance = AH(AR-SR) = 14,400(122,400/14,400 – 120,000/15,000) = 14,400*(8.50 – 8) = 7200 unfavorable Labor quantity variance $______ FavorableUnfavorable Quantity variance = SR(AH-SH) = 120,000/15,000(14,400 – 15,000) = 8*(-600) = -4800 which is 4800 favorable

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