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Exercise 6-5 Marigold manufactures aluminum canoes. In planning for the coming year, CFO Alexis King is...

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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