A company manufactures tennis rackets and uses a standard costing system. The master budget income statement for April w

Post by **answerhappygod** » Wed Apr 27, 2022 11:09 am

: A Company Manufactures Tennis Rackets And Uses A Standard Costing System The Master Budget Income Statement For April W 1 (29.59 KiB) Viewed 41 times

: A Company Manufactures Tennis Rackets And Uses A Standard Costing System The Master Budget Income Statement For April W 2 (28.97 KiB) Viewed 41 times

Required:
1. Prepare a detailed variance analysis of the
contribution approach income statement (i.e., variable costing
basis) for the month of April (i.e., Compare the actual income
statement with the flexible budget income statement and compare the
flexible budget income statement with the master budget income
statement). Show the variances appearing in the income statement
analysis. (You can combine the two types of materials as a single
line item in the analysis of the income statement). A template for
answering this question is given below. All variances should be
marked with either an “F” for favorable or “U” for
unfavorable.

: A Company Manufactures Tennis Rackets And Uses A Standard Costing System The Master Budget Income Statement For April W 3 (17.73 KiB) Viewed 41 times

A company manufactures tennis rackets and uses a standard costing system. The master budget income statement for April was based on the expectation of producing 20,000 units and selling 16,800 units. The budgeted sales price was $38 per unit, and total budgeted fixed selling and administrative costs were $170,200. There are no variable selling and administrative costs in this firm. Standard manufacturing costs used in determining costs under the master budget are listed below in Exhibit A. Exhibit A* Per Racket Raw material: Frame: 1.02 frames at $8.00 per frame Stringing materials: 22 feet at $0.13 per foot Direct labor: 0.3 hours at $14.40 per hour Variable overhead Fixed overhead Total standard cost per tennis racket $ 8.16 2.86 4.32 3.66 5.00 $24.00 *Standard costs are calculated for a production volume (denominator level of activity) of 25,000 units each month. The company actually sold 24,500 units in April. The accountants determined that the actual profits in April were $162,167. The income statement is provided in Exhibit B.
Exhibit B Income Statement for April Actual $957,950 Sales: 24,500 rackets at $39.10 Standard cost of goods sold: 24,500 rackets at $24.00 Unfavorable Material variance Unfavorable Labor variance Unfavorable Variable Overhead variance Unfavorable Fixed Overhead variance Cost of goods sold after adjustment for variances Gross Margin Selling and administrative expense Operating profit 588,000 12,830 4,873 6,180 18,900 630,783 327,167 165.000 $ 162.167 Actual production data for April is given in Exhibit C. Exhibit C Direct materials purchased and used: Stringing materials Frames Labor: ($14.65 per hour) Overhead: Variable Fixed 512,000 feet at $0.11 per foot 23,000 frames at $8.65 per frame 6,820 hours $ 86.700 $128,900 22,000 rackets Production The manager of the company is unable to explain why the accountant's profits are different from the amount of profits according to the flexible budget income statement
Actual $$$ Variance $$$ Flexible Variance $$$ $$$ Master $$$ Sales Less V.C. DM DL V-OH CM Less FC Manufacturing Sell & Admin Profits $$$ $$$ $$$ $$$ $$$ $$$ $$$ $$$ $$$ $$$ $$$ $$$ $$$ $$$ $$$ $$$ $$$ $$$ $$$ $$$ $$$ $$$ $$$ $$$ $$$ $$$ $$$ $$$ $$$ $$$ $$$ $$$ $$$ $$$ $$$