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Golden Food Products produces special-formula pet food. The company carries no inventories. The master budget calls for the company to manufacture and sell 122,500 cases at a budgeted price of $60 per case this year. The standard direct cost sheet for one case of pet food follows: Direct materials Direct labor Sales revenue Less variable costs Direct materials Direct labor Variable overhead Total variable costs Variable overhead is applied based on direct labor-hours. The variable overhead rate is $16 per direct labor-hour. The fixed overhead rate (at the master budget level of activity) is $10 per unit. All nonmanufacturing costs are fixed and are budgeted at $2.2 million for the coming year. At the end of the year, the costs analyst reported that the sales activity variance for the year was $336,000 favorable. The following is the actual income statement (in thousands of dollars) for the year for Golden Food Products: Contribution margin (3 pounds @ $2) (0.25 hours @ $32) Less fixed costs Fixed manufacturing overhead Nonmanufacturing costs Total fixed costs $ 10,300 810 1,002 525 a. Direct materials: Price variance Efficiency variance b. Direct labor. Price variance Efficiency variance c. Variable overhead: Price variance Efficiency variance $ 2,337 $ 7,963 $6 1,565 2,130 $3,695 $ 4,268 Operating profit During the year, the company purchased 322,500 pounds of material and employed 33,200 hours of direct labor. Required: a. Compute the direct materials price and efficiency variances. b. Compute the direct labor price and efficiency variances. c. Compute the variable overhead price and efficiency variances. Note: For all requirements, enter your answers in whole dollars. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.

Golden Food Products produces special-formula pet food. The company carries no inventories. The master budget calls for the company to manufacture and sell 122,500 cases at a budgeted price of $60 per case this year. The standard direct cost sheet for one case of pet food follows: Direct materials Direct labor Sales revenue Less variable costs Direct materials Direct labor Variable overhead Total variable costs Variable overhead is applied based on direct labor-hours. The variable overhead rate is $16 per direct labor-hour. The fixed overhead rate (at the master budget level of activity) is $10 per unit. All nonmanufacturing costs are fixed and are budgeted at $2.2 million for the coming year. At the end of the year, the costs analyst reported that the sales activity variance for the year was $336,000 favorable. The following is the actual income statement (in thousands of dollars) for the year for Golden Food Products: Contribution margin (3 pounds @ $2) (0.25 hours @ $32) Less fixed costs Fixed manufacturing overhead Nonmanufacturing costs Total fixed costs $ 10,300 810 1,002 525 a. Direct materials: Price variance Efficiency variance b. Direct labor. Price variance Efficiency variance c. Variable overhead: Price variance Efficiency variance $ 2,337 $ 7,963 $6 1,565 2,130 $3,695 $ 4,268 Operating profit During the year, the company purchased 322,500 pounds of material and employed 33,200 hours of direct labor. Required: a. Compute the direct materials price and efficiency variances. b. Compute the direct labor price and efficiency variances. c. Compute the variable overhead price and efficiency variances. Note: For all requirements, enter your answers in whole dollars. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.

Principles of Cost Accounting
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter8: Standard Cost Accounting—materials, Labor, And Factory Overhead
Section: Chapter Questions
Problem 17P: Shinto Corp. uses a standard cost system and manufactures one product. The variable costs per...
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Golden Food Products produces special-formula pet food. The company carries no inventories. The master budget calls for the company to manufacture and sell 122,500 cases at a budgeted price of $60 per case this year. The standard direct cost sheet for one case of pet food follows: Direct materials Direct labor Sales revenue Less variable costs: Variable overhead is applied based on direct labor-hours. The variable overhead rate is $16 per direct labor-hour. The fixed overhead rate (at the master budget level of activity) is $10 per unit. All nonmanufacturing costs are fixed and are budgeted at $2.2 million for the coming year. At the end of the year, the costs analyst reported that the sales activity variance for the year was $336,000 favorable. The following is the actual income statement (in thousands of dollars) for the year for Golden Food Products: $ 10,300 810 1,002 525 $ 2,337 $ 7,963 Direct materials Direct labor Variable overhead Total variable costs Contribution margin Less fixed costs Fixed manufacturing overhead Nonmanufacturing costs Total fixed costs a. Direct materials: Price variance Efficiency variance (3 pounds @ $2) (0.25 hours @ $32) Operating profit During the year, the company purchased 322,500 pounds of material and employed 33,200 hours of direct labor. Required: a. Compute the direct materials price and efficiency variances. b. Compute the direct labor price and efficiency variances. c. Compute the variable overhead price and efficiency variances. Note: For all requirements, enter your answers in whole dollars. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. b. Direct labor. Price variance Efficiency variance c. Variable overhead: Price variance Efficiency variance $6 1,565 2,130 $ 3,695 $ 4,268
Transcribed Image Text:Golden Food Products produces special-formula pet food. The company carries no inventories. The master budget calls for the company to manufacture and sell 122,500 cases at a budgeted price of $60 per case this year. The standard direct cost sheet for one case of pet food follows: Direct materials Direct labor Sales revenue Less variable costs: Variable overhead is applied based on direct labor-hours. The variable overhead rate is $16 per direct labor-hour. The fixed overhead rate (at the master budget level of activity) is $10 per unit. All nonmanufacturing costs are fixed and are budgeted at $2.2 million for the coming year. At the end of the year, the costs analyst reported that the sales activity variance for the year was $336,000 favorable. The following is the actual income statement (in thousands of dollars) for the year for Golden Food Products: $ 10,300 810 1,002 525 $ 2,337 $ 7,963 Direct materials Direct labor Variable overhead Total variable costs Contribution margin Less fixed costs Fixed manufacturing overhead Nonmanufacturing costs Total fixed costs a. Direct materials: Price variance Efficiency variance (3 pounds @ $2) (0.25 hours @ $32) Operating profit During the year, the company purchased 322,500 pounds of material and employed 33,200 hours of direct labor. Required: a. Compute the direct materials price and efficiency variances. b. Compute the direct labor price and efficiency variances. c. Compute the variable overhead price and efficiency variances. Note: For all requirements, enter your answers in whole dollars. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. b. Direct labor. Price variance Efficiency variance c. Variable overhead: Price variance Efficiency variance $6 1,565 2,130 $ 3,695 $ 4,268
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