CALCULATOR PRINTER VERSION BACK ES Sheridan manufactures aluminum canoes. In pla

Question

CALCULATOR PRINTER VERSION BACK ES Sheridan manufactures aluminum canoes. In planning for the coming year, CFO Alexis King is considering three different sales targets: 2,500 canoes, 3,000 canoes, and 3,500 canoes. Canoes sell for $808 each. The standard variable cost information for a canoe is as follows. Direct materials $344 Direct labor Variable overhead 157 Utilities Indirect material Indirect labor 35 30 60 $626 Total Annual fixed overhead cost is expected to be: Maintenance 18,100 udy Depreciation 39,500 Insurance Rent 25,080 28,050 Total$110,730 $858 each. The company incurred the Alexis king chose to prepare a static budget based on sales of 3,000 canoes. Actual sales were 3,100 canoes at a price of following costs for the year: Direct material $1,053,300 Direct labor Variable overhead 398,400 Fixed overhead 7,830 459,100 Total $2,028,630 Version 4.24. All Rights Reserved. A Division of 2ohn Wiley & Sons, Inc

Explanation / Answer

Calculation of Sales Volume Variance :-

= Units Sales in flexible budget - Unit Sales in Static budget

= 3100 units - 3000 units

= 100 units F

Shows the Sales Volume Variances and Flexible budget variances.

Particulars Actual Results Flexible Budget Variance Flexible Budget Sales Volume Variance Static Budget Units Sales 3100 0 3100 100 F 3000 Revenue $2659800 $155000 F $2504800 $80800 F $2424000 Less : Expenses Direct Materials $1053300 $13100 F $1066400 $34400 U $1032000 Direct Labor $459100 $27600 F $486700 $15700 U 471000 Variable Overhead $398400 $10900 U $387500 $12500 U $375000 Fixed Overhead $117830 $7100 U $110730 $0 $110730 Total $631170 $177700 F $453470 $18200 F $435270

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