Assignment:
Tuscany Statuary manufactures bust statues of famous historical figures. All statues are the same size. Each unit requires the same amount of resources. The following information is from the static budget for 2009:
Expected production and sales 5,000 units
Direct materials 50,000 pounds
Direct manufacturing labor 20,000 hours
Total fixed costs $1,000,000
Standard quantities, standard prices, and standard unit costs follow for direct materials and direct manufacturing labor.
Standard Qty Standard $ Standard Unit $
Direct materials 10 pounds $10 / pound $100
Direct Mfg labor 4 hours $40 / hour $160
During 2009, actual number of units produced and sold was $6,000. Actual cost of direct materials used was $594,000, based on 54,000 pounds purchased at $11 per pound. Direct manufacturing labor-hours actually used were 25,000, at the rate of $38 per hour. As a result, actual direct manufacturing labor costs were $950,000. Actual fixed costs were $1,005,000. There was no beginning or ending inventories.
1. Calculate the sales-volume variance and flexible-budget variance for operating income.
2. Compute price and efficiency variances for direct materials and direct manufacturing labor.