A company\'s flexible budget for 13,000 units of production reflects sales of $2

Question

A company's flexible budget for 13,000 units of production reflects sales of $299.000; variable costs of $78,000; and fixed costs of $91,000. Calculate the expected level of operating income if the company produces and sells 16,000 units. 15.) Use the following data to find the direct labor rate variance if the company produced 3,500 units during the period. 16.) Fletcher Company collected the following data regarding production of one of its products. Compute the direct labor efficiency variance. 17.) Milltown Company specializes in selling used cars. During the month, the dealership sold 27 cars at an average price of $15,500 each. The budget for the month was to sell 25 cars at an average price of $16,500. Compute the dealership's sales volume variance for the month.

Explanation / Answer

Ans 14 per unit $ Calculation No. of units 13000 16000 Sales 299000 23 368000 23*16000 Less; variable cost 78000 6 96000 6*16000 Less: Fixed Cost 91000 91000 Opearting Income 130000 181000 Ans C $181000 Ans 15 Direct labor rate variance= Actual Hours*(Actual rate-Standard rate) 12400*(7.4-6.95) 5580 Unfavorable Ans A Ans 16 Direct labour efficiency variance Standard rate*(Actual Hours-Standard Hours allowed) 12.75*(91300-(45000 units*2 hours)) 16575 Unfavorable Ans D Ans 17 Sales Volume variance (Actual units sold-Budgeted unit sold)* standard profit per unit (27-25)*16500 33000 Favourable Ans a

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