Question

) The Master (Static) budget for Jack Daniels Inc. is presented below. For June, Jack Daniels...

  1. ) The Master (Static) budget for Jack Daniels Inc. is presented below. For June, Jack Daniels Inc. manufactured and sold 920 units for $835. During this month the company incurred $460,000 total variable expenses and $180,000 total fixed expenses.
    1. Required
      1. Prepare a flexible budget performance report for June including all variances.

         Master (Static) Budget

Units

1,000

Sales

$800,000

Variable costs

450,000

Contribution margin

$350,000

Fixed costs

150,000

Operating income

$200,000

  1. Jack Daniels Inc. used 3,450 pounds of aluminum in June to manufacture 920 units. The company paid $28.50 per pound during the month to purchase aluminum. On June 1, the company had 50 pounds of aluminum on hand. At the end of June, the company had only 30 pounds of aluminum in its warehouse. Daniels used 4,340 direct labor hours in June, at an average cost of $41.50 per hour.  The standard for aluminum is 4 pounds per unit at a standard cost of $25.00 per pound. The standard for direct labor is 5 hours per unit at a standard rate of $40 per hour.
    1. Compute for June, Jack Daniels Inc.
      1. Purchase price variance for aluminum
      2. Direct labor rate and efficiency variance
    2. Daniels deployed new strategies for both aluminum and labor. For aluminum and labor they invested in better inputs. Did management make good decisions?
0 0
Add a comment Improve this question Transcribed image text
Answer #1

a.

Flexible Budget Performance Report

For The Month Of June

Actual results Revenue and spending variance Flexible budget Activity variance Master budget
Units 920 920 1,000
Sales $768,200 $32,200 F $736,000 (920*$800,000/1,000) $64,000 U $800,000
Variable cost 460,000 46,000 U 414,000 (920*$450,000/1,000) 36,000 F 450,000
Contribution margin 308,200 13,800 U 322,000 28,000 F 350,000
Fixed costs 180,000 30,000 U 150,000 0 150,000
Operating income $128,200 $43,800 U $172,000 $28,000 U $200,000

b.

i. Purchase price variance = Actual quantity*Standard price - Actual quantity*Actual price

Actual quantity purchased = 3450+30-50 = 3430 units

Purchase price variance = 3,430*$25 - 3,430*$28.50

Purchase price variance = $85,750 - 97,755 = $12,005 Unfavorable

Material usage variance = Standard quantity*Standard price - Actual quantity*Standard price

Material usage variance = 920*4*$25 - 3,450*$25

Material usage variance = $92,000 - 86,250 = $5,750 Favorable

Direct labor rate variance = Actual hours*Standard rate - Actual hours*Actual rate

Direct labor rate variance = 4,340*$40 - 4,340*$41.50

Direct labor rate variance = $173,600 - 180,110 = $6,510 Unfavorable

Direct labor efficiency variance = Standard hours*Standard rate - Actual hours*Standard rate

Direct labor efficiency variance = 920*5*$40 - 4,340*$40

Direct labor efficiency variance = $184,000 - 173,600 = $10,400 Favorable

ii. No, management did not make good decision as both the purchase price variance for aluminium and labor rate variance are unfavorable.

Add a comment
Know the answer?
Add Answer to:
) The Master (Static) budget for Jack Daniels Inc. is presented below. For June, Jack Daniels...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • Standard Cost Sheet, Product XV-1 EXHIBIT 14.5 SCHMIDT MACHINERY COMPANY Standard Cost Sheet Product: XV-1 Descriptions...

    Standard Cost Sheet, Product XV-1 EXHIBIT 14.5 SCHMIDT MACHINERY COMPANY Standard Cost Sheet Product: XV-1 Descriptions Quantity Cost Rate Subtotal Total Direct materials: Aluminum $100 4 pounds $25/pound 1 pound PVC 40/pound 40 Direct labor 5 hours 40/hour 200 Variable factory overhead 5 hours 12/hour 60 Total variable manufacturing cost $400 Fixed factory overhead 24/hour 5 hours 120 120 Standard manufacturing cost per unit $520 50 Standard variable selling and administrative cost per unit *Budgeted fixed factory overhead cost $120,000....

  • Direct Material Variances Goldman, Inc. is a manufacturer of lead crystal glasses. The standard direct materials quantit...

    Direct Material Variances Goldman, Inc. is a manufacturer of lead crystal glasses. The standard direct materials quantity is 0.7 pounds per glass at the cost of $0.35 per pound. The actual result for one month’s production of 6,950 glasses was 1.3 pounds per glass, at the cost of $0.45 per pound. Calculate the direct materials cost variance and the direct materials efficiency variance. Direct Labour Variances Goldman, Inc. manufactures lead crystal glasses. The standard direct labor time is 0.5 hours...

  • ACC 300 CHAPTER 6 HW Jensen Manufacturing has the following information relating to their master budget...

    ACC 300 CHAPTER 6 HW Jensen Manufacturing has the following information relating to their master budget for 2020: Units Sold Selling Price Pounds of Direct Materials Per Unit Manufactured DL Hours Per Unit Manufactured OH Rate Per DL Hour Current Inventory of Finished Product Target Inventory of Finished Product Current Inventory of Direct Materials Target Inventory of Direct Materials Cost per Pound of Direct Material Cost per Direct Labor Hour 2,500 units $100 per unit 3 pounds 2 hours $15...

  • Jake’s Cheese Company produces gourmet cheese for resale at local grocery stores. The master budget indicates...

    Jake’s Cheese Company produces gourmet cheese for resale at local grocery stores. The master budget indicates that the company expects to use 4.0 pounds of direct materials for each unit produced at a cost of $7.00 per pound (one unit = one batch of cheese). Each unit produced will require 0.50 direct labor hours at a cost of $12.00 per hour. Variable manufacturing overhead is applied based on direct labor hours at a rate of $6.00 per hour. Last year's...

  • Jake’s Cheese Company produces gourmet cheese for resale at local grocery stores. The master budget indicates...

    Jake’s Cheese Company produces gourmet cheese for resale at local grocery stores. The master budget indicates that the company expects to use 4.0 pounds of direct materials for each unit produced at a cost of $7.00 per pound (one unit = one batch of cheese). Each unit produced will require 0.50 direct labor hours at a cost of $12.00 per hour. Variable manufacturing overhead is applied based on direct labor hours at a rate of $6.00 per hour. Last year's...

  • During June, Danby Company’s material purchases amounted to 8,000 pounds at a price of $6.20 per...

    During June, Danby Company’s material purchases amounted to 8,000 pounds at a price of $6.20 per pound. Actual costs incurred in the production of 2,500 units were as follows: Direct labor: $ 121,506 ($15.40 per hour) Direct material: $ 32,798 ($6.20 per pound) The standards for one unit of Danby Company’s product are as follows: Direct Labor: Direct Material: Quantity, 3 hours per unit Quantity, 2 pounds per unit Rate, $15.00 per hour Price, $5.90 per pound     Required: Fill...

  • Puvo, Inc., manufactures a single product in which variable manufacturing overhead is assigned on the basis...

    Puvo, Inc., manufactures a single product in which variable manufacturing overhead is assigned on the basis of sta The company uses a standard cost system and has established the following standards for one unit of product Standard Price or Rate Direct materials Direct labor Variable manufacturing overhead Standard Quantity 6.90 pounds 8.60 hours 8.60 hours 5 0.70 per pound $44.50 per hour 9.60 per hour Standard Cost $ 4.83 26.7e $ 5.76 During March, the following activity was recorded by...

  • The direct material price variance during June is ___?

    Heavy Products, Inc. developed standard costs for direct material and direct labor. In 2017, AII estimated the following standard costs for one of their major products, the 10−gallon plastic container.Budgeted quantity Budgeted priceDirect materials0.7 pounds$50 per poundDirect labor0.05 hours$25 per hourDuring June, Heavy Products produced and sold 23,000 containers using 20,000 pounds of direct materials at an average cost per pound of $53 and 16,100 direct manufacturing labor-hours at an average wage of $25.50 per hour.The direct material price variance...

  • Animent Industries, Inc. (AII), developed standard costs for direct material and direct labor. In 2015, AII...

    Animent Industries, Inc. (AII), developed standard costs for direct material and direct labor. In 2015, AII estimated the following standard costs for one of their major products, the 10-gallon plastic container. Budgeted quantity Budgeted price Direct materials 0.70 pounds $80 per pound Direct labor 0.05 hours $20 per hour During June, AII produced and sold 16,000 containers using 19,000 pounds of direct materials at an average cost per pound of $84 and 11,200 direct manufacturing labor-hours at an average wage...

  • the labor rate variance for june is Kartman Corporation makes a produ in Corporation makes a...

    the labor rate variance for june is Kartman Corporation makes a produ in Corporation makes a product with the following standards Direct materials Direct labor Variable overhead Standard Quantity or Hours 6.5 pounds 0.6 hours 0.6 hours Standard Cost Standard Price or Rate Per Unit $ 7.00 per pound $ 45.50 $ 24.00 per hour $ 1440 $ 4.00 per hour $ 2.40 In June the company's budgeted production was 3.400 units but the actual production was 30 units. The...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT