Exercise 6-5
Marigold manufactures aluminum canoes. In planning for the coming year, CFO Alexis King is considering three different sales targets: 2,500 canoes, 3,000 canoes, and 3,500 canoes. Canoes sell for $800 each. The standard variable cost information for a canoe is as follows.
Direct materials | $ | 303 | ||
Direct labor | 170 | |||
Variable overhead | ||||
Utilities | 35 | |||
Indirect material | 30 | |||
Indirect labor | 60 | |||
Total | $ | 598 |
Annual fixed overhead cost is expected to be:
Maintenance | $ | 19,450 | ||
Depreciation | 37,200 | |||
Insurance | 25,180 | |||
Rent | 29,520 | |||
Total | $ | 111,350 |
Alexis King chose to prepare a static budget based on sales of
3,000 canoes. Actual sales were 3,100 canoes at a price of $850
each. The company incurred the following costs for the year:
Direct material | $ | 913,300 | |
Direct labor | 499,300 | ||
Variable overhead | 398,000 | ||
Fixed overhead | 119,150 | ||
Total | $ | 1,929,750 |
Prepare a performance report for the year that shows the flexible budget and sales volume variances. (If operating income is negative, enter amounts using a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round answers to 0 decimal places, e.g. 125. If variance is zero, select "Not Applicable" and enter 0 for the amounts.)
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