Q1) Downes Consolidated Industries International uses standard cost system and records standards in accounting records. Standard costs for one unit of one of its products are as follows.
| Direct Materials, 3lbs.@$20 per lb. |
$ 60.00 |
| Direct labor, 2 hrs. @$15 per hr. |
$ 30.00 |
| Variable overhead, 4machine hrs. @$1 per hr |
$ 4.00 |
| Fixed overhead, 4 machine hrs.@$2.50 per hr |
$ 10.00 |
| Total |
$104.00 |
Overhead is applied on basis of machine hours. Planned level of activity(denominator level) is 320,000 machine hours. Total budgeted fixed overhead is $800,000.
Other budgeted items are:
Unit selling price, $170,00 per unit
Variable selling & administrative expenses, $5 per unit
Fixed selling & administrative expenses, $160,000.
Planned level of production and sales, 80,000.
ACTUAL RESULTS:
Direct materials purchased, 250,000 lbs.@$22 per lb.
Direct materials used, 240,000
Direct labor, 150,000 hrs, total cost, $2,225,000
Variable overhead, $340,000
Fixed overhead, $810,000
Units produced, 82,000 Units
Units sold, 80,500
Selling price per unit,160,00
Variable selling and administrative expenses, $410,000.
Fixed selling & administrative , $175,000.
Actual machine hours,330,000.
Question:
Create a Flexible Budgeted Income Statement by using variable costing.