Problem 1: Part A: Flexy Flextime wants to review the budget using a Flexible Bu

Question

Problem 1:

Part A:

Flexy Flextime wants to review the budget using a Flexible Budget. The actual sales for the period are $200,000 with a $10 per unit sales price. Sales units were budgeted for 18,000 units this period. Cost of goods sold is budgeted at $4 per unit. Selling expenses are variable at $1.50 per unit. Administrative expenses are fixed at $35,000. Calculate the actual units sold and prepare a flexible budget.

Part B:

Makeshift Company produced 3,000 units of material using 2,080 direct labor hours at a total cost of $31,200. The standards for direct labor are 0.75 direct labor hours for every unit at an hourly rate of $13 per hour.

Calculate (a) the labor rate variance______

and (b) the labor efficiency variance.______

Explanation / Answer

Part A :

Actual unit sold = 200000/10 = 20000 unit

Flexible budget

Part 2:

Labour rate variance = (13*2080-31200) = 4160 U

Labour efficiency variance = (3000*.75-2080)*13 = 2210 F

Cost of goods sold (20000*4) 80000 Selling expense (20000*1.5) 30000 Administrative expense 35000 Total expense 145000

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