For the 1 st quarter PROBLEM of 2014, the company made the following budget. Sal
ID: 2375762 • Letter: F
Question
For the 1st quarter PROBLEM of 2014, the company made the following budget.
Sales 100,000 units
Selling price $40 per unit
Production 120,000 units
Production cost:
Direct material $6 per unit
Direct labor $8 per unit
Variable overhead $1 per unit
Fixed overhead $240,000
Selling cost:
Variable selling cost $2 per unit
Fixed selling $80,000
The following shows the actual performance for 2014 quarter 1
Sales 98000 units
Selling price $40.00 per unit
Production 110,000 units
Total direct material cost $693,000
Total direct labor cost $860,000
Variable overhead $120,000
Fixed overhead $245,000
Variable selling cost $200,000; fixed selling cost $80,000
For each item, determine if the company%u2019s performance was favorable (F) or unfavorable (U) and by how much dollar amount.
Revenue
Direct material cost
Direct labor cost
Variable overhead
Fixed overhead
Variable selling cost
Fixed selling.
Explanation / Answer
Revenue = 100,000*40 - 98000*40 = $80,000 U
Direct material cost = 110000*6 - 693000 = $33000 U
Direct labor cost = 110000*8 - 860000 = $20000 F
Variable overhead = 1*110000 - 120000 = $10000 U
Fixed overhead = 2*110000 - 245000 = $25000 U
Variable selling cost = 98000*2 - 200000 = $4000 U
Fixed selling.= 98000*0.80 - 80000 = $1600 U